Page 10 - Butterfly Realty LLC

You now are under contract

With terms of the deal approved by both parties, the purchase and sale agreement is signed by the
seller and buyer. This now makes the purchase and sale agreement a binding contract. At this point, you
can move forward to finalize the loan. The seller and buyer may have included contingencies (or
conditions) that must be satisfied before the deal is complete. Here are a few common ones:

• Appraisal contingency- cannot come in lower than the loan amount or buyer can pay
and/or negotiation difference

• Due diligence period- the buyer's opportunity to engage in a process of further
investigation of the property, such as home inspection, within a period of time agreed to by the
seller and buyer.

• Finance contingency-Borrowers obtain funding (final loan approval)

Some examples of appraisal contingency verbiage that is a part of the contract that protects your
earnest money:

VA Amendatory Clause. It is expressly agreed that, notwithstanding any other provisions of this Agreement, the Buyer shall
not incur any penalty by forfeiture of earnest money deposits or otherwise be obligated to complete the purchase of the property
described herein, if the Agreement purchase price or costs exceeds the reasonable value of the property established by the
Veterans Administration (“VA”). The Buyer shall, however, have the privilege and option of proceeding with the consummation of
this Agreement without regard to the amount of the reasonable value established by VA. If Buyer elects to complete the purchase at
an amount in excess of the reasonable value established by VA, Buyer shall pay such excess amount in cash from a source which
Buyer agrees to disclose to VA and which Buyer represents will not be borrowed funds except as approved by VA. If VA reasonable
value of the property is less than the purchase price, Seller may reduce the purchase price to an amount equal to the VA reasonable
value and the parties to the sale shall close at such lower purchase price with appropriate adjustments to the sales Agreement. This
amendatory clause shall apply even when the Financing Contingency Period has terminated.

FHA Amendatory Clause. It is expressly agreed that, notwithstanding any other provisions of this Agreement, Buyer shall not
be obligated to complete the purchase of Property described herein or to incur any penalty by forfeiture of earnest money deposits
or otherwise unless Buyer has been given in accordance with HUD/FHA requirements a written statement by the Federal Housing
Commissioner or a Direct Endorsement lender setting forth the appraised value of Property of not less than
$_________________________. Buyer shall have the privilege and option of proceeding with consummation of the contract without
regard to the amount of the appraised valuation. The appraised valuation is arrived at to determine the maximum mortgage the
Department of Housing and Urban Development will insure. HUD does not warrant the value or condition of the property. The
purchaser should satisfy himself/herself that the price and condition of the property are acceptable.

Conventional Appraisal Contingency. In addition to Buyer’s other rights herein, this Agreement shall be subject to the
following appraisal contingency. Buyer shall cause the Lender to: (a) select an appraiser to perform one or more appraisals of the
Property and (b) provide Seller with a copy of any appraisal that is for less than the purchase price of the Property. If any such
appraisal is for less than the purchase price, Buyer shall not later than __________ days from the Binding Agreement Date have the
right to request that Seller reduce the sales price of the Property to a price not less than the appraised price by submitting an
Amendment to Sales Price (F713) (“ATSP”) to Seller along with a copy of the appraisal supporting the lower price. In the event that
Buyer does not timely submit an ATSP to Seller, Buyer shall be deemed to have waived Buyer’s right to do so and this agreement
shall no longer be subject to an appraisal contingency.