What Happens If Your Appraisal Comes in Low
You agreed on a price with the seller. The appraiser says the home is worth less. Now what? This happens more often than you might expect, and knowing your options in advance keeps you from making a panic decision.
Why It Matters
Your lender will only lend based on the appraised value, not the agreed purchase price. If you offered $320,000 and the appraisal comes in at $305,000, the lender will base your loan on $305,000. That means you need to cover the $15,000 gap out of pocket — on top of your down payment — or renegotiate.
Your Options
Option 1: Ask the seller to lower the price to the appraised value. Option 2: Split the difference — meet somewhere between the appraised value and contract price. Option 3: Pay the gap in cash if you have the funds and believe the home is worth it. Option 4: Challenge the appraisal — your lender can request a reconsideration of value if there are comparable sales the appraiser missed. Option 5: Walk away, if you have an appraisal contingency in your contract.
The Appraisal Contingency
This is a clause in your purchase contract that lets you back out (and get your earnest money back) if the appraisal comes in below the purchase price. In competitive markets, some buyers waive this contingency to make their offer stronger — but that means you are committed to covering any gap. Only waive this if you have cash reserves and are comfortable with the risk.
Key Takeaways
- ✓Lenders loan based on appraised value, not purchase price — you cover the gap
- ✓You can renegotiate, pay the difference, challenge the appraisal, or walk away
- ✓An appraisal contingency protects you — think carefully before waiving it
- ✓Challenging an appraisal is possible if comparable sales were missed
Want a personalized plan?
HomeIQ Academy builds a learning path based on your situation — credit, income, savings — so you know what to focus on first.
Start Free