In a competitive North Texas market—especially in places like Frisco, Prosper, McKinney, Celina, Plano, and Little Elm—you’ll hear the phrase “appraisal waiver” constantly. It’s one of the biggest strategies buyers use to win homes, and one of the parts of the contract most people misunderstand.
When I represent buyers, I explain the different types of appraisal waivers, the risks, and the situations where they make sense. Used correctly, an appraisal waiver can help you win a home without exposing you to unnecessary financial risk.
Here’s exactly what you need to know.
1. First—What Is an Appraisal?
An appraisal is a third-party valuation ordered by your lender to determine if the home is worth the purchase price.
Why lenders care:
✔️ They won’t lend more money than the home is worth
✔️ They use the appraisal to protect themselves
✔️ If the appraisal is low, they may reduce your loan amount
This is where waivers come into play.
2. What Is an Appraisal Waiver?
An appraisal waiver is when the buyer agrees to give up some or all of their protection related to the appraisal as defined in the Third-Party Financing Addendum.
In Texas, there are three main types:
➤ Full Appraisal Waiver
➤ Partial Appraisal Waiver
➤ No Waiver (standard appraisal contingency)
Each works differently.
3. Full Appraisal Waiver
This is the strongest option—especially in competitive markets.
✔️ Buyer agrees to move forward even if the appraisal comes in low
✔️ Buyer agrees NOT to terminate based on appraisal
✔️ Buyer must cover the difference in cash if the appraisal is lower than the purchase price
Example:
If we offer $600,000 and the appraisal comes in at $540,000:
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You still pay $600,000
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You must bring an extra $60,000 in cash
This is huge commitment—and I only recommend it when it fits your financial situation and risk tolerance.
Best used when:
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It's a dream home
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Competition is intense
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You’re financially comfortable
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You want maximum offer strength
4. Partial Appraisal Waiver
The most common option I use with buyers.
Here’s how it works:
✔️ You agree to cover the appraisal gap up to a certain amount
✔️ If the appraisal comes in too low, you regain your right to terminate
✔️ This gives you strength and protection
Example:
We include a partial waiver for $20,000.
If you offer $600,000 and the appraisal comes in at $585,000:
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You cover the $15,000 gap
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The contract continues
If the appraisal comes in at $560,000:
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Gap is $40,000
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You are NOT required to cover that
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You regain your termination rights
This is a smart middle-ground strategy.
5. No Appraisal Waiver
This is the standard option.
✔️ Appraisal must meet or exceed purchase price
✔️ If the appraisal is low, you can terminate or renegotiate
✔️ Provides the most protection
❌ Weakest in competitive situations
I recommend this only when:
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Competition is low
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Buyer is risk-averse
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Home may not appraise
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Seller is willing to negotiate
6. What Most Buyers Don’t Realize About Appraisal Waivers
✔️ Appraisal still happens
A waiver does NOT mean there’s no appraisal—it just changes what happens if it's low.
✔️ Lenders still underwrite the appraisal
The bank still has requirements.
✔️ FHA/VA buyers CANNOT waive the appraisal
These loan types don’t allow waivers.
✔️ Jumbo loans often require stronger reserves
Especially with full waivers.
7. How I Determine Whether You Should Use a Waiver
This is where experience matters.
I evaluate:
✔️ The neighborhood’s appraisal history
✔️ How far comps are lagging current prices
✔️ The home’s list price strategy
✔️ Competition level
✔️ Your financial flexibility
✔️ Unique upgrades the appraiser may not value
✔️ Whether the seller underpriced on purpose
✔️ The listing agent’s feedback
I never recommend waivers lightly.
8. When Appraisal Waivers Are Critical
✔️ Multiple-offer situations
✔️ Highly desirable neighborhoods
✔️ Underpriced listings
✔️ Homes with 20+ showings first day
✔️ Homes with multiple cash buyers
✔️ Fast-moving new-build markets
✔️ Suburban North Texas markets with low inventory
A waiver can be the difference between winning and losing a home.
9. When Appraisal Waivers Are NOT a Good Idea
❌ Homes with obvious appraisal challenges
❌ Unique or over-customized properties
❌ Homes in declining neighborhoods
❌ When comps don’t support the price at all
❌ When listing agents expect appraisal issues
❌ When your cash reserves are tight
Waivers should never put you in financial danger.
10. My Biggest Rule for Appraisal Waivers
Never waive the appraisal unless you understand EXACTLY what it means in dollars.
Before submitting an offer, I calculate:
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Best-case appraisal
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Likely appraisal
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Worst-case appraisal
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Maximum potential out-of-pocket
If the numbers don’t make sense, we don’t waive.
11. Sellers Love Waivers—But They Don’t Always Require Them
A full waiver is strong, but not always necessary.
Sometimes a small partial waiver beats a cash offer because:
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It proves commitment
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It reduces seller risk
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It keeps buyers protected
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It meets seller needs
This is why strategy matters.
Bottom Line: Appraisal Waivers Are Powerful—When Used Correctly
They can win you the house you love.
They can also put you at major financial risk if used recklessly.
When we work together, I help you choose the waiver strategy that gives you the best chance of winning—without exposing you to unnecessary risk.
Want a Realtor Who Knows How to Use Appraisal Waivers Strategically?
If you want an expert guiding your appraisal strategy in a competitive North Texas market, I’d love to help.
