Appraisals are meant to provide consumer protection for the buyer.
If the home appraisal comes in higher than the buyer’s purchase price of the home, then the buyer benefits immediately by gaining home equity in the property.
If the appraisal comes in lower than the buyer’s purchase price for the property then the both parties will have to abide by the contract. If the contract has an appraisal contingency there are two different options:
- The buyer can decide to withdraw the offer and have their earnest money deposit refunded
- The seller can choose to lower the purchase price to the appraised value and the contract will continue intact.