What does it mean to waive an appraisal contingency?

Should you waive your appraisal contingency? What are the consequences?

First, what is a contingency?

Contingencies are conditions that must be met before an offer can be accepted by the seller or buyer.

They protect buyers and sellers from certain events and allow a buyer to walk away from a deal with their deposit.

So what is an appraisal contingency

An appraisal contingency is a stipulation on your offer which allows a buyer to walk away from a deal with their deposit if the appraised value of the home comes in unfavourably to them.

Then what does it mean to waive your right to an appraisal contingency?

To waive your appraisal means that you have stated to the seller, that you don’t care what the value of the home is worth (determined by a licensed appraiser) and that you will cover any gap/shortfall (if any).

You are also stating that you will not come back to the seller to negotiate the price knowing it's worth less than the agreed-upon price.

Sellers and agents are not stupid and will want to see that you have enough “extra” money to pay the difference. Also, they will double-check your file to ensure your loan will still be in healthy shape if the value came in less.