What Happens When an Appraisal Comes in Low?

Picture this: you’ve found your dream home, made an offer, and you’re already imagining where your favorite chair will go. Then, the appraisal comes in—and it’s lower than your agreed-upon purchase price. Suddenly, your plans are on shaky ground. But what does this actually mean, and what can you do?

Understanding the Appraisal

An appraisal is an unbiased estimate of a property’s market value, usually required by lenders to ensure they’re not lending more than a home is worth. When the appraisal comes in lower than the contract price, it can feel like a curveball for both buyers and sellers.

Why Does a Low Appraisal Happen?

• Market fluctuations: Prices might be rising faster than comparable sales can keep up.
• Unique features: Your dream home might have upgrades or quirks not reflected in recent sales.
• Appraiser’s opinion: Appraisals are part science, part art, and two appraisers might not always agree.

Your Options as a Buyer

• Renegotiate the price: Ask the seller to lower the price to match the appraisal.
• Make up the difference: Pay the gap in cash, if you’re able.
• Challenge the appraisal: Provide additional comps or request a second opinion.
• Walk away: If your contract allows, you may be able to back out without penalty.

For Sellers: What Now?

• Lower your price: Meet the buyer at the appraised value to keep the deal alive.
• Ask for another appraisal: If you believe the value is off, request a review or a new appraisal.
• Wait for another buyer: Sometimes, another buyer or a cash offer may come along.

Staying Calm and Flexible

A low appraisal isn’t the end of the road, but it does require some flexibility and honest conversation. The best path forward depends on your finances, your goals, and your willingness to compromise. With the right mindset—and the right team—you can navigate this bump in the road and get back to planning your move.