An appraisal contingency addendum is an attachment to a home purchase agreement. It lets the buyer end the purchase if the home appraises for less than the agreed price. Buying a home can be stressful, and a low appraisal is one surprise you can plan for in advance. Create your addendum online with the FormsPal template below, or download it as a PDF or Word file.
Last Updated: October 2026. This guide is reviewed and updated regularly to reflect current law. If you notice an error or outdated information, please contact us.
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An appraisal contingency clause is a provision that you can insert into the purchase contract that will allow you to back out of the contract if the home that you want to buy does not appraise at the right price. Consider adding one if you are financing a home in a market where prices swing up and down.
It also helps if you are not sure whether the home will be assessed at the value that you expect. It can be a great benefit if you are buying a fixer-upper and worry that you cannot finance the home for the right value.
Appraisals are an essential part of the home buying process. Most lenders order an appraisal before they approve a mortgage, and you have no control over the value that the appraiser assigns.
This addendum to real estate purchase contract can be very helpful in cases where you want a safety net for your purchase process. It can be hard to judge the value of a home that needs work. You might also worry about the prices of other homes in the area.
Sometimes the seller will not move on price even though you think it is too high. In that case, this document gives you a way to back out of the sale if the home is not assessed at the value you expect. That safety net can help when you work with a difficult seller or buy in a volatile market.
An appraisal contingency is not right for every purchase. In some deals the buyer can cover a low appraisal, or the appraised value matters less. Here are the cases where buyers most often skip it.
These are the most common reasons why you might waive an appraisal contingency. Think about your own situation before you decide to waive it. Without the contingency, you lose the safety net that protects you from buying a property that is not worth what you hoped.
You cannot control how an appraiser values the home that you want to buy. Sometimes the appraisal comes in lower than the price in the contract. That gap can cause major problems for the buyer and for the lender carrying the loan.
Either party can seek a different appraiser to look at the value of the property. If the appraisal comes in low again, you have some options to deal with the poor appraised value of the home.
There are a few things that you can do if the home that you want to buy has been assessed at a value that is lower than you expected. Pick the one that fits your budget, your lender and how much you want the home.
There are fewer options for the homeowner when this is the end result of the appraisal process. This can be a tough spot to find yourself in as the homeowner trying to sell your home. You can do the following when your home is appraised for a value that is much lower than you thought it would be:
The last option is the riskiest and many people will not and should not take this option. If you want to be sure that your home will sell despite a low appraisal amount, you will probably choose to renegotiate the price of the home.
Read the list below before you finalize your addendum. Your unique situation might influence the information that is included in your addendum. These addendums are also state-specific. However, these are the basic items that will need to be included:
The appraisal contingency addendum consists of the buyer’s right to terminate the contract if the appraised value is less than the purchase price. In this case, the buyer will have to provide the seller with a written notice. The seller, in their turn, will be obliged to return all earnest money deposits in connection with the existing agreement.
If none of these considerations are met by the buyer, the contingency will be deemed satisfied and the sale will proceed.
These steps follow the FormsPal template on this page, and filling it in takes only a few minutes. If you download the PDF, you can complete it with FormsPal’s PDF editor.
The screenshots under each step show the FormsPal Appraisal Contingency Addendum template filled with sample entries in blue, so you can see where each answer goes. The names, addresses, dates and amounts are examples only.
Using the appraisal contingency addendum is an essential part of the home buying process, and it can make the difference between an easy sales process and one that does not work out for either party.
A low appraisal does not always end a purchase. Buyers and sellers often renegotiate the price, bring more cash to the table or order a second appraisal before they decide whether to use the contingency.
A buyer can put down a larger down payment, get another appraisal, or negotiate a lower purchase price with the seller. A buyer can also use the contingency to back out of the sale.
A seller can renegotiate and lower the sales price, fix the problems that reduced the value of the home, or extend the buyer financing so the lender is not left with a loan for the reduced value.
The opening paragraph on page 1 holds the date of the addendum and the buyer and seller names and mailing addresses. The first recital holds the date of the purchase agreement and the street address of the property.
Yes. Use the Create My Document button to answer a few questions and build the addendum online. You can also download the PDF or Word file and fill it in yourself.
General information, not legal or tax advice.
