What Happens If a Home Appraises for Less Than the Offer Price?

You’ve listed your home, received multiple offers, and accepted a great one—above asking price! But then the buyer’s lender orders an appraisal, and it comes in below the agreed purchase price. Now what?

What Is a Low Appraisal?

An appraisal is a professional estimate of your home’s value, ordered by the buyer’s lender to ensure they aren’t lending more than the home is worth. If the appraisal comes in low, it creates a gap between the purchase price and what the lender is willing to finance.

Why Does This Matter?

Lenders will only fund a loan based on the appraised value. If the buyer offered $550,000 but the appraisal comes in at $520,000, the lender won’t cover the extra $30,000. This shortfall becomes a sticking point for the deal.

Seller Options When the Appraisal Comes in Low:

1. Negotiate a Price ReductionYou can agree to lower the sale price to match the appraised value. This is common if you want to ensure the deal closes.

2. Ask the Buyer to Pay the DifferenceThe buyer can bring extra cash to cover the gap. This works best when the buyer has strong motivation and financial flexibility.

3. Split the DifferenceA middle-ground option where you and the buyer each cover part of the gap to keep the deal moving forward.

4. Challenge the AppraisalYour agent can request a reconsideration of value by presenting comparable sales that justify a higher price. However, success isn’t guaranteed.

5. Cancel the DealIf neither party is willing to budge, the deal can fall through. This is a last resort, but sometimes unavoidable.

Can You Avoid a Low Appraisal?

• Price Realistically from the StartOverpricing can backfire, even in a hot market.

• Ensure Your Agent Provides Strong Comps to the AppraiserEspecially in unique or rapidly changing markets.

• Prep the Home to Show WellAppraisers do take condition and improvements into account.

Bottom Line

A low appraisal isn’t the end of the world, but it does require strategic negotiation. A knowledgeable realtor will guide you through options that protect your bottom line while keeping the deal alive.

FAQs

Q: Why would a home appraise for less than the offer price?

A: Appraisals can come in low due to rapidly changing market conditions, overbidding in a competitive market, or if comparable sales (comps) in the area don’t support the offer price. Appraisers have strict guidelines and may not factor in emotional bidding wars.

Q: Can the buyer still get the loan if the appraisal is low?

A: Only for the appraised amount. The buyer would need to pay the difference in cash, renegotiate the purchase price, or walk away if there’s an appraisal contingency in the contract.

Q: As a seller, am I obligated to lower my price?

A: No, you are not obligated to lower your price. However, if the buyer cannot or will not cover the appraisal gap, the deal may fall through.

Q: Can the appraisal be appealed?

A: Yes, your realtor can request a Reconsideration of Value by providing additional comps or correcting errors in the report, but adjustments are rare and must be well-supported.

Q: Should I get my own independent appraisal?

A: You can, but lenders will only accept appraisals ordered through their approved channels. However, a seller-initiated appraisal can be useful to justify your price during negotiations.

Q: Can a low appraisal kill the deal?

A: Yes, if no agreement is reached on how to bridge the gap, or if the buyer’s financing is contingent on a certain appraisal amount, the deal can fall apart.

Q: How common are low appraisals in 2025?

A: With fluctuating home values and competitive bidding still present in certain markets, low appraisals are not uncommon—especially when offer prices escalate faster than comparable closed sales.