What Happens If My Home Appraisal Comes in Low?
A low appraisal doesn’t necessarily mean your sale is over. It simply means the appraiser determined the home’s value is lower than the agreed-upon purchase price. If the buyer is financing the purchase, the lender will typically base the loan amount on the appraised value—not the contract price.
The good news is that there are several ways to move forward.
Why Does a Low Appraisal Matter?
Lenders use appraisals to ensure the home is worth the amount they’re lending. If the appraisal comes in below the purchase price, the buyer may not be able to borrow enough to complete the purchase under the original terms.
What Are Your Options?
The Buyer Pays the Difference – If the buyer has the financial resources, they may choose to bring additional cash to closing to cover the gap between the appraised value and the purchase price.
Renegotiate the Purchase Price – The buyer and seller may agree to lower the purchase price to match—or come closer to—the appraised value.
Meet Somewhere in the Middle – In many cases, the buyer and seller negotiate a compromise by sharing the difference. This allows both parties to move forward without one side absorbing the full impact.
Request a Reconsideration of Value – If there are errors in the appraisal or recent comparable sales were overlooked, the buyer’s lender may allow a request for reconsideration. Additional market data may support a revised valuation, although there is no guarantee the appraisal will change.
The Buyer May Cancel the Contract – If the purchase agreement includes an appraisal contingency and the parties cannot reach an agreement, the buyer may have the right to terminate the contract.
Can a Low Appraisal Be Prevented?
While no one can control the appraised value, pricing your home based on recent comparable sales and current market conditions can reduce the likelihood of appraisal issues. Keeping records of recent upgrades and improvements may also help provide useful information to the appraiser.
How Your REALTOR Can Help
If an appraisal comes in low, your REALTOR will review the report, evaluate the comparable sales used by the appraiser, and discuss your options with you. They’ll negotiate with the buyer’s agent, provide additional market data if appropriate, and work to find a solution that keeps your transaction moving forward whenever possible.
The Bottom Line
A low appraisal can be disappointing, but it doesn’t automatically mean your sale will fall through. Whether it’s renegotiating the price, requesting a review of the appraisal, or exploring other solutions, an experienced REALTOR® can help you navigate the situation and work toward a successful closing.
