An appraisal contingency protects a buyer when a home's appraised value comes in below the agreed purchase price, since lenders only finance based on appraised value, not the price written in the contract. A low appraisal doesn't automatically kill a deal, but it does force a decision, and in Washington, that decision is more connected to your financing than most Spokane buyers realize. Here's how it actually works.
What Is an Appraisal Contingency in Washington?
In Washington, appraisal protection isn't a separate standalone contingency, it's built into NWMLS Form 22A, the financing contingency, as a specific paragraph addressing what happens if the home appraises below the sale price. The lender orders the appraisal to confirm the home's market value before finalizing the loan. If the appraised value supports the purchase price, the transaction moves forward as planned. If it comes in low, the appraisal paragraph in Form 22A outlines what happens next.
What Are Your Options If the Home Appraises Low?
Under NWMLS Form 22A, once a buyer gives notice of a low appraisal, the seller has 10 days to respond with one of several options: a reappraisal or reconsideration of value at the seller's expense, consent to reduce the price to the appraised value, a partial price reduction paired with the buyer covering the remaining gap, or a rejection of the buyer's notice entirely. If the seller agrees to reduce the price to the appraised value, the buyer then has 3 days to accept that price or terminate and recover earnest money. If the seller rejects the notice or doesn't respond in time, the buyer generally gets a short reply window, commonly 3 days, to either waive the financing contingency and move forward at the original price, or terminate the agreement and get their earnest money back.
Can You Challenge a Low Appraisal Separately From the Seller's Response?
Yes, a buyer's lender can request a Reconsideration of Value if the original appraisal appears to have missed strong comparable sales or used outdated or mismatched comps, separate from whatever the seller offers under Form 22A. This doesn't always succeed, and appraisers aren't required to change their number, but a well supported request with solid comps does sometimes result in a revised value. It's worth pursuing when there's a genuine case to make, not just when a family wants a different number.
What Happens If You Waive the Financing Contingency? This Is the Part Buyers Miss
NWMLS Form 22A includes a specific checkbox asking whether a buyer's waiver of the financing contingency also waives appraisal protection, and if that checkbox is left blank, the default answer is yes, waiving one waives both. This is easy to miss in a fast moving, competitive offer. Buyers and agents need to actually look at how that specific line is filled out, rather than assuming financing and appraisal protection are automatically separate. There's also a second way this can happen without any checkbox involved: if a buyer misses their loan application deadline, changes loan type without the seller's consent, or switches lenders without consent after the agreed deadline, Form 22A treats that as an automatic waiver of the financing contingency, and that automatic waiver also waives appraisal protection, no checkbox, no choice involved at that point. Understanding both of these paths before you're mid transaction matters far more than after.
Is There a Way to Formalize a Gap Coverage Commitment in Advance?
Washington has a specific form, the Increased Down Payment Addendum, that some buyers use to formally commit to covering a defined amount toward a low appraisal as part of their offer, rather than leaving that commitment vague or open ended. The exact terms and how this interacts with your appraisal protection depend on how the addendum is written, so this is a document worth reviewing closely with your agent rather than assuming what it does based on its name alone.
How Common Are Low Appraisals?
Low appraisals happen in a minority of transactions, not the majority, but they're common enough that going in without a plan is a real risk, especially in a competitive offer. Knowing your options before you're in the middle of a transaction, not after a low number shows up, is what actually makes this manageable when it happens.
What Does This Mean for Buyers and Sellers in Spokane?
Understanding exactly what you're protected against, and what you might be giving up if you waive part of your financing contingency, is worth a direct conversation before you write an offer. Emiley and Zech at Rios and Co Real Estate can walk through what makes sense for your specific situation, whether that's staying fully protected or strategically waiving certain terms to stay competitive.
About the Authors
Contract language matters more than most buyers expect, especially the parts linked together in ways that aren't obvious at first read. Emiley and Zech at Rios and Co Real Estate make sure buyers and sellers understand exactly what they're agreeing to before signing, not after a low appraisal forces the question.
This article is for general informational purposes and does not constitute legal or financial advice. Contract terms and contingency options vary by transaction. For guidance specific to your offer, consult your real estate agent or lender directly.
