Hat tip to our seller who noticed a new paragraph in the counter-offers this year that went undetected by everyone I know – and we go to the Forms Update every year to hear about changes!
Paragraph 1C in the counter-offer identifies the Appraisal Gap:
When we first read this, it sounded like the purchase price would automatically be lowered to the appraised value without negotiation.
But Gov at the CAR legal office submitted this response:
It means that if, for example, the buyer made an offer of $500,000, contingent on the property appraising at $475,000, and the Seller countered at $520,000 and the buyer accepted the counter, the buyer’s appraisal contingency is automatically adjusted to be $495,000. In other words the $25,000 “appraisal gap” is carried over in the counter. (I admit the language is a little confusing).
Here is the part of the contract that he references:
I’ve never seen anyone put a lower value in Paragraph L(2), but we just started using this version.
The touching part was that the counter-offer came later – after the contract verbiage above – which would mean that it would supersede it. It looked like the buyer could waive the appraisal contingency, but then the counter would make it valid again.
Glad that Gov was able to clear that up!