What Happens If Your Appraisal Comes In Low?

You found a home you love. You made an offer. The seller accepted. Everything feels like it's moving forward.

Then the appraisal comes back lower than your offer price.

This is one of those moments where buyers start to panic—but it doesn't have to derail your purchase. Let's walk through what actually happens next and how to think about your options.

What a Low Appraisal Actually Means

A low appraisal means the lender's appraiser determined the home is worth less than what you agreed to pay.

This matters because your lender will only loan based on the appraised value—not your offer price.

Here's an example:

You offer $500,000. The appraisal comes in at $480,000. If you're putting 20% down, your lender will base your loan on $480,000, not $500,000. That means you'd need to bring an extra $20,000 in cash to close—on top of your down payment.

That's the "appraisal gap."

Why Appraisals Come In Low (Especially Right Now)

Appraisals are based on recent comparable sales—typically within the last 90 days and within a mile or so of the property.

In a market that's cooling or shifting, there's often a lag. Buyers might still be offering based on what homes were selling for, but appraisers are looking at what homes actually sold for weeks or months ago.

Other reasons appraisals come in low:

• Few recent comparable sales in the area
• The home has unique features that don't translate to appraised value
• The appraiser used older or less relevant comps
• You overpaid in a competitive situation

Sometimes the appraisal is wrong. Sometimes it's telling you something you needed to hear.

Your Options When the Appraisal Comes In Short

You're not stuck. Here's what you can do.

Option 1: Renegotiate the Purchase Price

You can go back to the seller and ask them to lower the price to match the appraisal.

In a shifting market, many sellers will negotiate—especially if they're motivated or if the appraisal reflects real market changes.

This is the cleanest solution if the seller agrees.

Option 2: Cover the Gap with Cash

If you have the cash and you still believe the home is worth it, you can cover the difference.

This makes sense if:

• You plan to stay long-term
• You researched comps and feel confident in the value
• The gap is small and won't strain your finances

Don't stretch just to make a deal work. You still need reserves after closing.

Option 3: Meet Somewhere in the Middle

Sometimes the buyer and seller split the difference.

You cover part of the gap. The seller lowers the price slightly. Everyone moves forward.

This works when both sides are reasonable and want the deal to close.

Option 4: Walk Away (If You Have an Appraisal Contingency)

If you included an appraisal contingency in your offer, you can walk away and get your earnest money back.

This contingency exists specifically for this situation. It protects you from being forced to overpay or come up with cash you don't have.

If the numbers don't work, it's okay to step back.

What If You Waived Your Appraisal Contingency?

If you waived this contingency to make your offer more competitive, you're obligated to move forward—even if the appraisal comes in low.

That means you either cover the gap in cash or lose your earnest money if you back out.

This is why waiving contingencies should never be done lightly. It's not just about winning the offer. It's about whether you can actually handle the outcome.

How to Protect Yourself Before This Happens

The best way to avoid appraisal issues is to know the market before you make your offer.

Here's how:

Research recent sales. Look at closed comps in the neighborhood from the last 60–90 days. Not list prices—actual sold prices.

Work with an agent who understands local value. Someone who can help you see whether a home is priced fairly or if you're stretching.

Don't get emotionally attached to a number. Offer what the home is worth to you—not what you think you need to offer to win.

Consider a pre-offer appraisal in competitive situations. Some buyers order an appraisal before making an offer if they're concerned about overpaying. It costs a few hundred dollars, but it gives you clarity.

The Real Question: Is This Home Worth It to You?

A low appraisal doesn't automatically mean you made a bad decision.

But it does give you a moment to pause and ask: Does this still make sense?

If the home checks all your boxes, you're planning to stay long-term, and the gap is manageable—covering it might be the right move.

If the appraisal makes you realize you were stretching or overpaying, it's okay to renegotiate or walk away.

The goal isn't to win a deal. It's to make a decision you'll still feel good about five years from now.

If you're navigating an appraisal issue or want to understand value before you make an offer, let's talk. My job is to help you see what actually matters—and avoid the mistakes you don't see coming.