Appraisal Contingency in Washington

One of the most important safeguards in Washington real estate transactions is the appraisal contingency. It ensures that a property is valued at or above the agreed-upon purchase price before a lender will approve financing. For buyers, this provides critical protection. For sellers, it can introduce challenges if the appraisal comes in low.

This guide explains how appraisal contingencies work in Washington, why they matter, and how both buyers and sellers can navigate them successfully.

What Is an Appraisal Contingency?

An appraisal contingency allows buyers to back out of the purchase—or renegotiate—if the home does not appraise for at least the purchase price. The appraisal is conducted by a licensed appraiser ordered by the buyer’s lender.

Key goals of an appraisal:

Confirm the home’s market value.

Ensure the lender’s investment is protected.

Reduce risk of the buyer overpaying.

🔗 Related glossary terms: Appraisal, Market Value, Loan-to-Value (LTV) Ratio.

Why Appraisals Matter in Washington

Washington’s competitive housing markets (Seattle, Bellevue, Redmond) often see bidding wars.

Buyers may offer above asking to win, but lenders won’t finance beyond the appraised value.

A low appraisal can derail a deal unless the parties renegotiate.

Options When an Appraisal Comes in Low

If the appraisal value is less than the purchase price, buyers can:

Renegotiate with the seller to lower the price.

Pay the difference out of pocket.

Challenge the appraisal with additional comps.

Cancel the contract under the appraisal contingency.

For sellers, a low appraisal often means either lowering expectations or risking the deal falling apart.

Tips for Buyers

Understand that lenders use appraisal value, not listing or offer price, to determine financing.

Avoid overextending in bidding wars without a backup plan.

Consider adding an appraisal gap clause if willing to bring extra funds.

Work with an experienced agent or advisor to provide strong comps to the appraiser.

Tips for Sellers

Price the home realistically to reduce risk of low appraisals.

Highlight recent upgrades or renovations to support value.

Provide the appraiser with comparable sales (comps).

Be prepared to negotiate if the appraisal comes in low.

🔗 Related terms: Inspection Contingency, Escrow, Closing Costs.

Waiving the Appraisal Contingency

In hot markets, some buyers waive the appraisal contingency to make their offer more attractive. While this can help win bidding wars, it’s risky. Buyers who waive the contingency must bring additional funds if the appraisal is low.

FSBO Sellers and Appraisal Contingencies

For for-sale-by-owner (FSBO) sellers, appraisal contingencies can feel intimidating. Without agent guidance, understanding your options is critical.

Using a flat fee MLS listing service ensures your home gets MLS exposure and attracts serious buyers while you stay in control of negotiations.

Key Takeaways

The appraisal contingency protects buyers from overpaying.

A low appraisal may lead to renegotiation, extra buyer funds, or cancellation.

Sellers should price realistically and prepare supporting documentation.

Waiving contingencies is risky and should be carefully considered.

A flat fee multiple listing service helps FSBO sellers handle contingencies while saving money.

By understanding appraisal contingencies in Washington real estate, buyers and sellers can protect their interests, plan ahead, and move toward a smoother closing.

Want to sell your home with full MLS exposure and cost savings? Try Wayber’s flat fee MLS listing service today.