VA Amendment to Contract
Contracts to purchase homes often come with appraisal contingencies. These protect would-be buyers in the event the VA appraisal determines the home is worth less than what they agreed to pay.
VA loans feature their own unique appraisal contingency known as the VA Amendment to Contract. This key document must be signed by both buyer and seller.
The Amendment to Contract contingency protects a VA buyer’s earnest money if they walk away from a deal because the appraised value came in below the purchase price. Earnest money is a good-faith deposit buyers typically include when making a purchase offer.
Unlike with other loan types, VA buyers cannot waive this appraisal contingency.
Low VA Appraisal Outcomes
Generally, VA expects the Amendment to Contract to be signed and included with all contract documents at the time of the appraisal.
In short, this contingency allows prospective buyers to walk away from the contract with their earnest money if the appraisal comes up short. But it also notes buyers may still be able to move forward in these cases.
Every buyer’s situation is different. Talk with your loan officer if your appraised value ultimately comes in lower than the purchase price.
Distressed Properties & Amendment to Contract
Talk with your loan officer if you’re considering purchasing a distressed property owned by a bank or a government agency.
At American Financial Network, Inc. we require every home seller to sign the VA Amendment to Contract, even if the seller is a bank or a government agency, such as HUD, Fannie Mae or Freddie Mac. These agencies aren’t always willing to sign the VA Amendment to Contract when they’re selling their foreclosures and other distressed properties.
Depending on the lender and the seller, there may be little point in pursuing certain properties if the seller ultimately refuses to sign the Amendment to Contract.
