Ran into an interesting little scenario today.
The buyer's contract reads "Home must appraise for full purchase price, or buyer has the option to cancel the contract, with return of earnest money".
So... 20 days into the contract... appraisal comes through... and it passes... (yay!!)... but the buyers decide to use a different lender, because they can't get PMI through that lender ... the 2nd lender sends in a new appraiser, and guess what... the property doesn't pass appraisal... they're approved for the loan.. and this lender can get them PMI (not sure why)... but it doesn't meet appraisal, and they now want to negotiate the purchase price.
But wait... we DID pass appraisal! The first one! It doesn't say that the property must match the appraisal that will in the end be used by the second lender, does it?
I guess the language needs to be changed to: "If home doesn't appraise for full purchase price, or higher (by the ultimate lender), buyer has the option to cancel the contract, with return of all earnest monies."