Appraisal Contingency

What is an Appraisal Contingency?

Let me begin with a quick explanation of what an appraisal contingency plan is.  An appraisal contingency allows you to terminate a legally binding contract if the appraised value is lower than the contract price. In the past, the appraisal contingency was the appraisal the bank ordered however, due to some recent changes in how properties are being valued this may be changing.

New information about Appraisal Contingency’s

Fannie Mae has recently established the Property Inspection Waivers also known as PIWs.  This is a new option that allows you to pass on the traditional appraisal that has been required for different types of mortgage transactions such as refinancing and purchasing a property. The reasoning for this is to save the client time and money during a mortgage transaction.

There are a few things you should be aware of before forgoing the appraisal. The first being that without an appraisal you may not know the market value of the property and therefore you could end up paying more than the property is worth.

Something else to be aware of is that by agreeing to the PIW you are required to sign a contract that will relinquish your rights to any future litigations against Fannie Mae and the lender. If signed they will not be held liable for any future the value, condition, and marketability of the property.

Without an appraisal an appraisal contingency will not be available to you.  If the bank believes the data, they have about the property is sufficient enough to determine the value they will not require an appraisal. I would highly recommend that in this case you require an appraisal. A property is a large asset and you do not want to find out after the purchase that you over paid.

Make sure you have an educated Agent

In these types of transactions, it is the agent’s responsibility to specify which appraisal the contingency is for. If you are using the PIW for your mortgage transaction they traditional contingency will not be available, which is why it is pertinent that the agent shows the contingency for the appraisal you request.

The benefit of being able to get your own appraisal is that you also can select your own appraiser. Which will provide you with an unbiased value of the property, so you know you are not overpaying for the property. This will be your appraisal and the bank will not use. However, you can still use this appraisal as a contingency in the contract which will allow you to back out of the contract if you find the value is not correct.

Due to these new changes buyers are going to be more involved than ever with their loan transactions. Make sure you have an educated agent and educate yourself so that you can protect yourself from any financial hardship.


Please contact our office with any questions you may have or to schedule your appraisal appointment at 760-741-7699, or use our contact page on our website.

Brandlin Appraisals Inc. specialize in helping people who need appraisals for estate purposes, divorce, date of death, bankruptcy, FSBO’s and more throughout San Diego county. For more information please contact us at (760)741-7699, or visit our website at, or email us at

Mike Brandlin
San Diego, CA // Real Estate Appraiser
(760) 741-7699

San Diego Real Estate Appraisal Services For:
Divorce Appraisals / Marriage Dissolution
Bankruptcy Appraisals
Bail Bonds Appraisals
Estate / Date of Death / Retrospective Appraisals
Financial Planning & Trusts
PMI Removal Appraisals
Pre-Foreclosure & Short Sales
Tax Assessment Appeals
Pre-Listing, Pre-Purchase, FSBO’s
Probate Appraisals


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