What to Do if Your Home Appraisal Comes in Low

Key takeaways

• A low appraisal can delay or derail a home sale because lenders won’t finance more than the appraised value.
  
• Buyers and sellers have options: renegotiate, challenge the appraisal, contribute cash, or walk away.
• Preparing with comps, repairs, and an experienced real estate agent can help reduce appraisal issues.

What does a low appraisal mean?

A low appraisal happens when the appraiser values the home for less than the purchase price. Because lenders won’t approve loans above the appraised value, this creates a financing gap that can put the deal at risk.

For example, if you offered $400,000 but the appraisal comes back at $380,000, your lender will only approve a loan based on $380,000. The $20,000 difference has to be resolved between the buyer and seller.

Why appraisals come in low

Several factors can lead to a low appraisal:

• Rising markets: Home prices may be increasing faster than comparable sales data reflects.
  
• Unique properties: Homes without many recent comps can be harder to appraise accurately.
  
• Condition issues: Outdated systems, deferred maintenance, or visible defects may lower value.
• Market cooling: In slower markets, appraisals may fall below recent contract prices.

What buyers can do if the appraisal comes in low

1. Renegotiate the purchase price

Buyers can ask the seller to lower the price to match the appraised value. In many cases, sellers agree rather than risk losing the sale.

2. Cover the difference in cash

If buyers want to proceed at the agreed price, they can pay the gap out of pocket. This often happens in competitive markets.

3. Challenge the appraisal

If the buyer or agent believes the appraisal is inaccurate, they can request a reconsideration of value by submitting better comparable sales or correcting errors in the report.

4. Switch lenders or appraisers

Since different lenders may use different appraisal management companies, ordering a new appraisal could yield a higher valuation.

5. Walk away

If the gap can’t be bridged, buyers can use an appraisal contingency to cancel the contract without penalty.

 

What sellers can do if the appraisal comes in low

1. Lower the price

Agreeing to the appraised value may be the fastest way to keep the deal moving.

2. Negotiate with the buyer

Sellers can agree to split the difference or cover part of the appraisal gap.

3. Request a second appraisal

If the first appraisal seems flawed, sellers can support the buyer in requesting a new one.

4. Improve the property

Minor updates, repairs, or cosmetic fixes can sometimes help raise the appraised value in a re-evaluation.

5. Relist the home

If the seller believes the appraisal is unreasonably low and no compromise is possible, they may choose to walk away and list again.

How to prevent a low appraisal

While you can’t control every factor, preparation helps reduce risk:

• Work with an experienced real estate agent who knows local comps.
  
• Provide a list of recent improvements to the appraiser.
  
• Tidy and maintain the property before the appraisal.
  
• Be mindful of pricing strategy in fast-changing markets.
  

FAQs about low appraisals

How often do appraisals come in low?

Industry estimates suggest that fewer than 10% of appraisals come in below contract price, but the risk increases in hot or volatile markets.

Can you challenge a low appraisal?

Yes. Buyers or sellers can request a reconsideration of value by submitting stronger comparable sales or pointing out mistakes in the report.

Do sellers have to lower the price after a low appraisal?

No. Sellers aren’t required to reduce the price, but they may need to negotiate if they want to keep the deal alive.

What happens if I can’t cover the appraisal gap?

If neither side can bridge the difference, the deal may fall through unless the contract includes a workaround.

Do cash buyers need an appraisal?

No. Cash buyers don’t need lender appraisals, but some still order one for peace of mind.

 

Moving forward: When your appraisal came in low

A low appraisal can be a challenging moment, but it’s important to remember that it’s a common hurdle in real estate, not necessarily a deal-breaker. Proactive planning, clear communication, and informed decision-making are key to successfully navigating this situation. When your home appraisal comes in low, connecting with a Redfin agent for their personalized support and expert guidance can make all the difference in achieving your home-buying or selling goals.