What happens if an appraisal comes back lower than the specified amount in the appraisal contingency?

When an appraisal returns a value that is lower than what is specified in the appraisal contingency, the buyer has the option to void the contract because the agreed-upon conditions regarding the appraisal have not been met. This provides the buyer with protection, ensuring that they are not obligated to proceed with the purchase at a price higher than the property's appraised value.

Having this contingency in place is crucial as it allows the buyer to reassess their commitment to the purchase when the appraisal indicates that the market value does not match the offer they made. It can lead to potential renegotiations or a withdrawal from the contract without penalties for the buyer, which serves to protect their financial interests during the transaction process.