When the Appraisal Comes In Low: What Buyers and Sellers Should Know
There’s nothing quite like the excitement of accepting an offer, whether you’re the buyer finally picturing yourself in your dream home or the seller preparing to move forward into your next chapter.
But then the appraisal comes in… and it’s lower than the agreed-upon purchase price.
If that’s the situation you’re facing, take a deep breath. This doesn’t mean the deal is dead. It just means we have a decision to make and I’m here to help you navigate it with clarity and confidence.
What Is an Appraisal, and Why Does It Matter?
An appraisal is an independent evaluation of a home’s value, typically ordered by a lender during the financing process. It protects the bank from lending more than the house is worth, and helps buyers avoid overpaying for a property.
But when the appraised value comes in lower than the purchase price, it creates what’s known as an appraisal gap, and that can complicate things.
If You’re the Buyer: Your Options
A low appraisal doesn’t have to end your homebuying journey. You’ve got a few paths forward:
1. Negotiate with the Seller
You can ask the seller to lower the purchase price to match the appraised value. Some sellers will agree, especially if they want to avoid going back on the market.
2. Cover the Gap
If you love the home and can afford it, you might decide to pay the difference in cash. Just make sure it makes financial sense long-term.
3. Meet in the Middle
This is one of the most common outcomes: the buyer and seller split the difference. It’s not ideal for either side, but it often gets the deal done.
4. Challenge the Appraisal
If there were errors or overlooked comps, we can submit a reconsideration of value with supporting data. This can work, but it’s not guaranteed.
5. Walk Away (If Necessary)
If your contract has an appraisal contingency, you may have the right to exit the deal with your deposit intact. Not the outcome anyone wants, but sometimes it’s the best decision.
If You’re the Seller: Here’s How to Respond
It’s disappointing when a low appraisal threatens a deal, especially when multiple offers and local comps suggest your pricing was on point.
Here’s how we can handle it together:
1. Review the Appraisal Carefully
Appraisers can make mistakes. If we find inaccuracies in square footage, features, or missed upgrades, we can request a correction.
2. Provide Your Comparables
Sometimes an appraiser isn’t local or misses recent comps. I’ll pull supporting data to show why your home deserves its price tag.
3. Negotiate Strategically
Depending on how motivated your buyer is, we might find a middle ground or decide it’s worth holding firm and going back to market with updated pricing or marketing.
How to Avoid Appraisal Surprises
While we can’t control every aspect of the process, here are some steps we can take to reduce the risk of a low appraisal:
- Price strategically from the start. I’ll do a full market analysis to set a list price that aligns with current appraised values.
- Document upgrades. A pre-appraisal package showing permits, upgrades, and improvements can help justify a higher value.
- Clean, stage, and prep the home. Appraisers are human—they’re influenced by condition and presentation, too.
Let’s Talk Through Your Options
An appraisal gap can feel like a setback, but it’s also just a fork in the road. Whether you’re a buyer trying to secure your dream home or a seller protecting your bottom line, there’s almost always a path forward.
Let’s review the numbers, look at the big picture, and decide what makes the most sense for your goals. As always, I’m here to guide you every step of the way.
