A quick post for my fellow real estate professionals in Arizona; 
as well as home buyers and home sellers who may be in escrow and should be aware of the AAR (AZ Association of Realtors) legal opinion on...
‘Appraisal Contingency' and how it affects buyer & seller rights, time frames and earnest monies.
Please note, this opinion pertains only to the AAR Purchase Contract used in Arizona.
Neither the AAR or myslef is offering any opinion in other states.
However, I encourage all Real Estate Agents and Brokers to examine rules in their respective states.
In the past there has been some confusion on whether or not,
according to AAR Purchase Contract ..... as it pertains to cash buyers,
Can Cash Buyers ** cancel a contract if the home fails to appraise for the purchase price anytime during the escrow period??
In essence,
does the appraisal for sales price contingency runs the life of the contract??
According to the newsletter this month from AAR, This is NOT TRUE!
"Cash buyers can only cancel a contract within the inspection period, if a home fails to appraise.
Lines 59-61 (of the AAR Purchase Contract) only apply if financing is involved.
I hope this helps! and Good luck to all of you!
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Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale Real Estate needs.
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James, I think that you will find a lot of people that do not know this fact. Thanks for sharing.
in this day and age of strict underwriting and appraisers having difficulty finding value, this is crucial for buyers (and sellers ) to know - good post!!
Danny , Jason - appraisers are under heavy scrutiny of their practice and procedures. It is sometimes hard to get value for most homes unless its and REO. Make sure your agent knows how to protect earnest $$
James - cash buyers need to know that they cannot cancel on appraisal contingency. Appraisal contingency is a loan contingency.
james ladarski - thank for pointing that out. if you cancel during inspection contingency, you dont need to use appraisal as a reason. So if you are a cash buyer, loan contingecies are out the window.
Barbara - you are correct.
According to the AZ (AAR) real estate contract, you do not need to give a reason to cancel during the inspection period.
so if you are a cash buyer, you can always cancel during inspection. After, you cannot use the loan contingency and would not be entitled to a refund of earnest money.
we are losing a lot of escrows due to homes not appraising. Especially due to cash out refi for debt consolidation amounts that do not satisfy the borrowers needs. Nothing to do with earnest money. But just wanted everyone to know that homes are having a more challenging time to reach value.
jose - sorry to hear about the appraisal issue affecting your business. Though, it goes to show that buyers (and sellers) need to be aware of inspection contingency dates, and appraisal contingency for contracts and earnest monies in this day and age.
Hi James,
Good info and this is such a confusing issue. I realize your post and comments are based on AZ contracts. In CA ours are much different.
We have "active" contracts, meaning each and every contingency (appraisals and others) need to be removed in writing. We have deadlines, however many agents here think contingencies "sunset" at the expiration of the time guidelines, not so. We have another small provision called "continuation of contingencies" that most agents are not truly aware of.
So with review appraisals being done so often that really throws a wrench into the works!
BTW, thanks for visiting my post.
Lynda - Thanks for pointing out the (major) differences from State to State.
I am only familiar with AZ contracts. However, you raise a great point. The written word always supersedes the printed word, so I always advise my clients to remove every contingency (appraisals and others) need to be removed in writing.