When This Form Is Used
- Use only if the Third Party Financing Addendum is attached to the contract AND the transaction does not involve FHA-insured or VA-guaranteed financing.
- "CONCERNING THE PROPERTY AT: ______" — enter the street address and city of the property being purchased, connecting this addendum to the correct contract.
- People often call this the "Appraisal Waiver Addendum," but it actually offers three different choices — a full waiver, a partial waiver, or an additional appraisal termination right — not just a waiver.
Check Only One Box
- The form specifically says "Check one box only." The three choices are: (1) Waiver, (2) Partial Waiver, (3) Additional Right to Terminate.
Quick meaning — Choice 1: Buyer takes the full appraisal risk. Choice 2: Buyer takes appraisal risk only down to a stated value. Choice 3: Buyer adds another appraisal-based termination right with its own value and deadline.
Choice 1 — Waiver
- No dollar blank, no days blank. Buyer waives the right to terminate under Paragraph 2B of the Third Party Financing Addendum if Property Approval fails because the appraisal’s opinion of value doesn’t satisfy the lender’s underwriting requirements.
- Plain English: "I will not use a low appraisal as my reason to terminate under Paragraph 2B."
- If the lender reduces the loan because of the appraisal, the cash portion of the Sales Price increases by the amount the loan was reduced.
Example: Sales price $500,000, loan expected $400,000. If a low appraisal causes the lender to cut the loan by $20,000, Buyer may need an additional $20,000 in cash to keep the deal together. Important: this only waives the appraisal-value reason under 2B — not every possible Property Approval issue (like insurability or lender-required repairs).
Choice 2 — Partial Waiver
- One dollar blank: "the opinion of value is $______ or more."
- Buyer waives the Paragraph 2B appraisal termination right only if BOTH: (i) Property Approval fails because of the appraisal, AND (ii) the appraisal is at least the dollar amount written in.
- Think of the blank as: "How low is Buyer willing to let the appraisal go before Buyer wants to keep the appraisal-based termination protection?"
Example: Sales price $500,000, Buyer writes $475,000. Appraisal of $490,000 or $475,000 → waiver applies, Buyer can’t terminate on that basis. Appraisal of $465,000 → below the threshold, so the partial waiver does NOT apply and Buyer’s appraisal-based termination right under 2B is preserved. If the loan is reduced because of an appraisal that’s still above the threshold, the cash portion of the Sales Price increases by the reduction amount — the actual cash exposure depends on how the lender adjusts the loan.
Choice 3 — Additional Right to Terminate
- Two blanks: (1) "Buyer may terminate within ___ days after the Effective Date," and (2) "if the appraised value is less than $______."
- This works in the opposite direction from a waiver — Buyer is adding an extra appraisal termination right on top of the existing Paragraph 2B right.
- Buyer must deliver a copy of the appraisal to Seller to use this right — simply saying "the appraisal came in low" is not enough.
- If Buyer properly terminates under this choice, earnest money is refunded to Buyer.
Example: Buyer enters 21 days and $490,000. Appraisal of $485,000 within the 21-day window, with the appraisal delivered to Seller → Buyer may terminate, earnest money refunded. Appraisal of $495,000 → not below $490,000, so no additional right here. Appraisal of $480,000 but after the 21-day deadline → this specific provision no longer applies; other contractual rights would need to be evaluated separately.
Choice 2 vs Choice 3 — Don’t Mix These Up
- Partial Waiver (Choice 2) — Buyer writes a floor, e.g. $475,000, meaning: "I accept the appraisal risk at $475,000 or ABOVE." At or above that number, the waiver applies; below it, the waiver does not apply.
- Additional Right (Choice 3) — Buyer writes a ceiling, e.g. $475,000, meaning: "Give me an additional termination right if the appraisal comes in BELOW $475,000." At or above that number, there’s no additional right from this provision; below it, the additional right may apply if the deadline and appraisal-delivery requirements are met.
"Or more" (Choice 2) and "less than" (Choice 3) point in opposite directions — that’s the part that confuses people most.
Signatures
- Signature lines for Buyer, Buyer, Seller, and Seller — both sides sign because this addendum modifies rights in the purchase contract and the Third Party Financing Addendum.
