Releasing Appraisal Contingency
We recently had a buyer opt out of a contract after a low appraisal. They did not want to negotiate on price (even if we dropped it to appraised value) - they seemed to have gotten cold feet - and used the appraisal contingency to get out of the contract without penalty.
We had multiple offers and turned down other prospective buyers - who might have worked with us on price. We lost marketing time. And we had no recourse (appraisal contingency states buyer may retain EMD).
Here is the language:
"Buyer's obligation to complete this sale is contingent upon an appraisal of the Premises acceptable to lender for at least the purchase price. If the Premises fails to appraise for the purchase price in any appraisal required by the lender, Buyer has five (5) days after notice of the appraised value to cancel this Contract and receive a refund of the Earnest Money or the appraisal contingency shall be waived."
Any suggestions on how to protect ourselves from this scenario in the future?
Release contingency entirely? Write addendum allowing seller to keep EMD if contract is canceled due to appraisal contingency?