What Happens If a Home Doesn’t Appraise at the Contract Price

A low appraisal can catch buyers and sellers off guard, especially in a competitive market. When a home doesn’t appraise at the agreed contract price, it doesn’t mean the deal is dead, but it does require decisions from everyone involved.

Here’s what it means and what usually happens next.

Why Appraisals Matter

Lenders use appraisals to confirm the home’s value.

If the appraisal comes in lower than the contract price:

• The lender will base the loan on the appraised value, not the agreed price

• The gap must be addressed before the loan can move forward

Option 1: Renegotiate the Price

One common solution is renegotiation.

This may involve:

• The seller lowering the price to match the appraisal

• A partial price reduction shared by both parties

This option keeps the deal moving while reflecting market value.

Option 2: Buyer Brings Additional Cash

Buyers can choose to cover the difference.

This means:

• Paying the appraisal gap out of pocket

• Increasing the total cash needed at closing

Some buyers choose this if they strongly want the home and can afford it.

Option 3: Request an Appraisal Reconsideration

If there’s evidence the appraisal missed key details, an appeal may be possible.

This usually requires:

• Strong comparable sales

• Proof of upgrades or features not considered

Success depends on data and timing.

Option 4: Adjust the Loan Structure

In some cases:

• Buyers may change loan terms

• Increase down payment

• Modify financing options

This approach depends on lender guidelines.

Option 5: Walk Away

If an appraisal contingency is in place, buyers may have the option to cancel the contract without penalty.

This happens when:

• No agreement can be reached

• Financing terms can’t be adjusted

How Often This Happens

Low appraisals are more common in:

• Rapidly rising markets

• Multiple-offer situations

• Unique or hard-to-compare properties

They’re less common in balanced markets with strong comparable data.

Final Thought

A low appraisal doesn’t mean a deal has failed. It simply means the numbers need to be addressed. Understanding the options ahead of time helps buyers and sellers respond calmly and strategically.

With the right guidance, many appraisal issues can be resolved successfully.