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What Happens If the Appraisal Comes In Low? Your 4 Options
Low appraisal creates a gap: lender finances only to appraised value. On a $420K contract appraising at $390K: $30K gap to resolve. 4 options: seller reduces price; buyer pays gap in cash; split it; or exit on appraisal contingency and recover earnest money. File a Reconsideration of Value if appraiser missed strong comparables. Own Luxury Homes® 12-Point Agent Integrity Audit™ - we know which option to use.
What Happens If the Appraisal Comes In Low? Your 4 Options
What it means: your lender will only finance up to the appraised value. If the home appraised at $390,000 but you are under contract at $420,000, your lender will only loan against $390,000 — leaving a $30,000 gap you must cover somehow. You have four options.
Option 1: Renegotiate the Purchase Price
The most common outcome: go back to the seller and ask them to reduce the price to the appraised value. Sellers do not always agree, but they have a problem too — if you walk, they must find another buyer who will likely get the same appraisal. In a soft market or if the home has been sitting, sellers often accept. In a hot market where multiple buyers are competing, sellers are less likely to budge.
Options 2 & 3: Pay the Gap or Split It
If you want the home and can access the cash, you can pay the appraisal gap out of pocket (above and beyond your down payment). Alternatively, you can propose splitting: the seller reduces by a portion, you pay the balance. The right choice depends on how much you want the home, how much cash you have access to, and how motivated the seller is.
Option 4: Exit on the Appraisal Contingency
If you have an appraisal contingency (most purchase contracts include one unless you waived it), and you cannot reach an agreement with the seller on the gap, you can exit and recover your earnest money. This is your protection — but only if you act within the contingency window. Before exercising this option, review the appraisal report carefully: if the appraiser used poor comparables or made a factual error, you may be able to challenge it with a Reconsideration of Value (ROV) request through your lender.
“A low appraisal is one of the most common deal-killers I navigate with clients. The first thing I do is get the appraisal report and check the comparables the appraiser used. If there is a stronger comp the appraiser missed, we file a Reconsideration of Value. If the appraisal is defensible, we go to the seller with options: reduce, meet us halfway, or we exit. The seller almost always prefers negotiating to starting over. The key is to move quickly and not let the contingency window expire while you are deciding what to do.”
— Ryan Brown, Principal Broker & CEO, Own Luxury Homes®
What happens if the home appraises lower than the offer price?
The lender will only finance up to the appraised value. If appraised at $390K and contracted at $420K, the gap is $30K you must cover or resolve. Your options: ask the seller to reduce to $390K, pay the $30K gap in cash, split the difference, or exit under your appraisal contingency. Act within the contingency window — expired contingencies mean you either pay the gap or lose your earnest money by backing out.
Can a low appraisal be disputed?
Yes, through a Reconsideration of Value (ROV) request submitted through your lender to the appraiser. To support an ROV, provide comparable sales the appraiser may have missed that support a higher value, or point out factual errors in the report (incorrect square footage, missing improvements). An ROV does not always succeed, but when the appraisal used weak comparables, it can close a meaningful portion of the gap.
Own Luxury Homes® — we anticipate what-if scenarios before they happen. 12-Point Agent Integrity Audit™. Talk to a specialist ›
"The introduction Own Luxury Homes® makes is to a specialist with documented closing history in your specific market — not the county, not the metro, the submarket you're actually selling or buying in. That's the standard we verify before your name goes anywhere."
— Ryan Brown, Principal Broker & CEO, Own Luxury Homes® (FL License BK3626873)