Tip

Before submitting an offer to purchase a home, have your sales representative or lawyer include an appraisal clause to protect you against unpredicted costs and expenditures.

Why?

Having an appraisal clause protects you in the event the appraisal comes in below the agreed upon purchase price.  If the appraised value is less than the purchase price, you the purchaser now will have to come up with the difference between the appraised value and the purchase price if you are borrowing money from a lender.

Example Clause:

This offer is conditional upon the purchasers having an appraisal completed in the next five business days with the final estimate of value being either equal to or greater than the purchase price.  If the appraised value is lower than the purchase price the purchasers shall have the sole right to cancel this transaction with all deposits being returned in full.