If you're under contract on a home and waiting on the appraisal, that waiting period can feel a little tense. You already agreed on a price with the seller. Now a third party is about to weigh in on whether that price actually matches the home's value. So what happens if it doesn't?
I'm Heather Ann with Century 21 Results, and I help buyers and sellers across North Metro Atlanta navigate exactly this kind of moment. Let's break down what the appraisal contingency actually does, and what your options look like if the appraisal comes in low.
What Is An Appraisal Contingency?
An appraisal contingency is a clause in your purchase contract that makes the sale contingent on the home appraising at or above the price you agreed to pay. If you're financing the home, your lender orders the appraisal. It's a third-party professional opinion of what the home is actually worth, separate from what you and the seller agreed on.
Rocket Mortgage explains it simply: an appraisal contingency lets you renegotiate or walk away if a home appraises below your offer price, and it protects you from overpaying while giving you leverage if the numbers don't line up. That protection matters more than people realize until they're actually sitting in that situation.
Here in Georgia, this window is typically 15 to 21 days from the day your contract is fully executed by all parties. That's the timeframe your lender has to get the appraisal ordered, completed, and back in hand.
Why This Clause Exists
Lenders won't lend you more money than a home is worth. That's the whole reason the appraisal happens in the first place. If you offered $450,000 for a home and the appraisal comes back at $430,000, your lender isn't going to hand over financing based on the higher number. The appraisal contingency exists to protect you on both sides of that equation, from overpaying and from getting stuck without financing that matches the purchase price.
If The Appraisal Comes In At Or Above Price
This is the outcome everyone hopes for. If the appraised value matches or beats your contract price, you're clear to move forward toward closing without needing to renegotiate anything related to value.
If The Appraisal Comes In Low
This is where people start to panic, but you actually have three real options.
Ask the seller to lower the price. If the appraisal supports a lower number, you can negotiate the contract price down to match. Sellers don't always agree, especially in a competitive market, but it's always worth the conversation.
Bring cash to cover the difference. You can choose to pay the gap between the appraised value and the contract price out of pocket, on top of your down payment. This keeps the deal moving without renegotiating price.
Walk away and keep your earnest money. As long as your appraisal contingency is intact in the contract, a low appraisal gives you the right to cancel the deal and get your earnest money deposit back.
None of these options are fun to think through in the moment, but having them spelled out ahead of time takes a lot of the stress out of it.
Why More Buyers Are Waiving This Contingency, And Why That's Risky
In competitive markets, some buyers waive the appraisal contingency to make their offer stand out. According to NAR's Realtors Confidence Index, roughly 17% of buyers nationally have waived their appraisal contingency in recent months. That can make an offer more attractive to a seller, but it also means you're on the hook to cover any appraisal gap yourself, with no way to walk away if the number comes in low.
I always walk my buyers through what waiving this contingency would actually mean for their specific situation before they decide to do it. It's not something to remove from a contract just because it sounds like a way to win a bidding situation.
The Bottom Line
The appraisal contingency is one of the most important protections built into your contract. It keeps you from overpaying, keeps your lender from over-financing, and gives you real options if the numbers don't match up. If you're getting ready to make an offer and want to understand exactly what protections you should keep in your contract, that's exactly the kind of conversation I have with buyers every day.
Frequently Asked Questions
How long does the appraisal contingency period last in Georgia? It's typically 15 to 21 days from the date your contract is fully executed by all parties, though the exact timeframe is negotiated in your specific contract.
Who orders the appraisal? Your lender orders it once your loan is in process. You don't order it yourself, and you don't choose the appraiser.
Can I negotiate with the seller if the appraisal comes in low? Yes. Asking the seller to lower the price to match the appraised value is one of your three main options if the appraisal comes back below the contract price.
What happens to my earnest money if I walk away due to a low appraisal? If your appraisal contingency is still active in the contract and the appraisal comes in low, you're entitled to walk away and receive your earnest money deposit back.
Should I waive my appraisal contingency to make my offer more competitive? It depends on your financial situation and how much risk you're comfortable taking on. I'd recommend talking through your specific numbers before making that decision, since waiving it means you'd need to cover any appraisal gap yourself.
Heather Ann Helping buyers across North Metro Atlanta understand exactly what to expect at every step of the contract, from offer to closing. HeatherAnnRealEstate.com