Short answerThe lender bases the loan on the lower of the price or the appraised value, so a low appraisal creates a gap. The parties can ask for a reconsideration of value with better comparable sales, renegotiate the price, split the gap, or the buyer can cover it in cash. The contract's appraisal terms decide each side's rights.
Why do appraisals come in low?
Few recent comparable sales, an offer that stretched above the market, unusual features, or errors in the appraisal such as wrong square footage.
How does a reconsideration of value work?
The lender sends the appraiser new information, such as comparable sales the appraiser did not use or corrections to facts. The appraiser decides whether to change the value. VA has its own process that often gives the buyer's agent a short window to send comparable sales before the value is final.
If you are selling
Have your comparable sales ready before the appraisal. Seller options.
If you are buying
Know your contract's appraisal terms and how much cash you could add. Buyer options.
Frequently asked questions
Can the buyer walk away after a low appraisal?
Depends on the contract's appraisal and financing terms. Read yours and ask your agent.
Is a second appraisal possible?
Sometimes, depending on the lender and loan type.
Keep reading
Want to know what a buyer's inspector may find before they do?
Book a free pre listing condition walk. I walk the house with you, point out what inspectors and FHA, VA, and USDA appraisers tend to flag, and give you planning ranges so you can decide what to fix, credit, price in, or disclose.
Book a condition walkOr call or text (812) 525-5489, or email john@yourpropertynegotiator.com.
The condition walk is a REALTOR® and contractor evaluation, not a home inspection, and it does not replace one. If you have already signed a listing agreement with another agent, please take these questions to your agent.
Looking at a house and not sure what you are getting into?
Ask for a free Before You Offer review. Send me the listing. I look over the photos, the seller's disclosure, and recent sales, then flag likely condition issues and planning cost ranges before you write an offer.
Request a Before You Offer reviewOr call or text (812) 525-5489, or email john@yourpropertynegotiator.com.
The Before You Offer review is a REALTOR® and contractor review of the listing, not a home inspection. It is for buyers who are not already working with an agent. If you have an agent, please bring these questions to your agent.
Written by John Long, REALTOR®, 1 Percent Lists Indiana Real Estate. Working contractor who has priced hundreds of home inspection repair requests. Former labor relations negotiator for a major manufacturer and U.S. Coast Guard veteran.
John Long, REALTOR® · 1 Percent Lists Indiana Real Estate · (812) 525-5489 · yourpropertynegotiator.com
This page is general information, not a substitute for a professional home inspection, and not legal, tax, insurance, or lending advice. Ask a real estate attorney about contracts and disclosure, a CPA about taxes, your lender about loan rules, and a licensed inspector or tradesperson about your house. Nothing here guarantees a sale price, net proceeds, repair cost, payment, timeline, appraisal, inspection result, or loan approval. Cost figures are planning estimates, not bids. I own Wardmark Property Operations LLC, a contracting company. You are always free to use any contractor you choose.