Appraisal Addendum - question.

[Chi Sastry]

I’ve put a contract on a 4-plex in NC and the seller wants me to fill out this addendum. Should I - if it’s not a big deal- which is the best option? I’m talking to a lawyer tomorrow also  

it sounds like for any reason I don’t close- I lose Ernest money… am I reading it right? 

1. This Addendum is attached to and made a part of the Contract between Buyer and Seller for the Property. IN THE EVENTOF A CONFLICT BETWEEN THIS ADDENDUM ANDTHE CONTRACT, THIS ADDENDUM SHALL CONTROL, EXCEPT THAT IN THE CASE OF SUCH A CONFLICT AS TO THE DESCRIPTION OF THE PROPERTY OR THE IDENTITY OF THE BUYER ORSELLER, THE CONTRACT SHALL CONTROL.

2. Buyer shall obtain an appraisal of the Property during the DueDiligence Period. The appraisal will be at the Buyer’sexpense and will be performed by a licensed North Carolina appraiser as ordered by Buyer’s lender.

3. If the Property appraises for less than the Purchase Price underthe Contract, then:

⬜ Buyer shall pay the difference between the appraised valueand the Contract Purchase Price and move to closing.

OR

⬜ Buyer shall pay the difference of the appraised value and theContract Purchase Price not to exceed $​and

not to exceed the Contract Purchase Price. Seller shall reduce Purchase Price to meet this price and both parties shall move to

closing.

OR

⬜ Buyer shall pay up to $​of the difference between theappraised value and the Contract Purchase Price

and move to closing.​Should the difference between theappraised value and the Contract Purchase Price exceed

$​and Seller is unable or unwilling to pay the difference,then Buyer may terminate the Contract and the Earnest MoneyDeposit shall be returned to Buyer. All other terms andconditions of the Contract shall remain in full force and effect.

OR

⬜ Buyer and Seller agree to amend Purchase Price under theContract to match the appraised value of the Property.

OR

⬜ Seller shall reduce the Purchase Price to match theappraised value subject to a floor of $​and both parties

shall move to closing. Should appraised value be less than$​, Buyer shall have the option of terminating the

contract and recovering the Earnest Money Deposit or payingthe difference between the appraised value and $ ​

and both parties shall move to closing.

Buyer acknowledges and agrees that by signing this Addendum, Earnest Money shall become non-refundable if Buyer terminatesthe contract before end of the Due Diligence Period except in the event Buyer becomes disqualified and unable to obtain a loan under Section 5(a) of the Contract or if, if applicable, Buyer’s contingent property does not sell under Section 5(b) of the Contract.​All other terms and conditions of the Contractshall remain in full force and effect.

Thanks!

[Greg Scott]

This addendum forces you to give up a lot but doesn't seem to give you any benefits.  Seems like the seller got scared the property won't appraise for what they are asking.

If you are "under contract" you have a signed Purchase and Sale Agreement, right?.  In that case, I'd probably just say "no".  If you are NOT under contract, this is simply a negotiation point to be discussed.  Seek expert counsel.