appraisal contingency

Definition

A buyer's escape hatch that lets them bail if a property doesn't appraise for the purchase price. The adult version of "I want my money back."

Example Usage

Smart buyers in this market keep their appraisal contingency intact, even if it makes their offer less attractive than someone drunk on optimism.

Origin

Standard practice in U.S. residential real estate contracts since mortgage lending became regulated

Fun Fact

Waiving appraisal contingencies became a competitive strategy in hot markets, essentially forcing buyers to bring extra cash if the appraisal falls short.

Source: Standard real estate purchase agreement terminology

Related Terms

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Starter Home

A concept from the 1990s where young people could afford a small first home before upgrading. Now it mostly exists as a fairy tale told by boomers alongside legends of affordable college and pension plans.

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inspection contingency

A contract clause allowing buyers to back out or renegotiate if the home inspection reveals problems, serving as an escape hatch for when dream homes turn into money pits. It's the buyer's insurance policy against buying someone else's disaster.

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prorations

The closing day arithmetic splitting property expenses and income between buyer and seller based on ownership periods. It's the financial equivalent of splitting a restaurant check by who ordered what.

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co-tenancy clause

A retail lease provision letting tenants break the lease or pay reduced rent if an anchor store closes or occupancy drops below a threshold. It's the commercial tenant's escape hatch from a dying mall.

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master lease

A lease that gives the tenant the right to sublease the property to others, essentially making them a middleman landlord. It's landlording with training wheels, or a profit opportunity, depending on your perspective and local laws.

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easement

A legal right allowing someone else to use part of your property for a specific purpose, like utility access or a driveway. It's basically permanent permission to trespass, enshrined in your deed.

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