What Happens If the Home Appraisal Comes in Low?

A low appraisal can feel like a major setback—especially after a buyer has already fallen in love with the home. But here’s the most important thing to understand: a low appraisal does not automatically end a transaction. It’s a bump in the road, not a dead end, and many deals still move forward successfully with the right strategy.

An appraisal is simply the lender’s professional opinion of value, based on recent comparable sales (“comps”), the home’s condition, and current market conditions. The lender uses this value to confirm the property supports the loan amount. In other words, the lender is ensuring they aren’t financing more than the home is reasonably worth.

Why Low Appraisals Happen

Low appraisals are more common during market transitions—especially when prices are stabilizing or shifting. If the market has slowed down, or homes are no longer selling above list price, the most recent comps may not support a higher contract price.

Appraisals may also come in low when:

• the home is priced higher than nearby recent sales

• there aren’t enough similar comparable homes nearby

• the home has upgrades that aren’t easily valued

• the market moved quickly but comps haven’t caught up yet

What Options Buyers Have

When an appraisal comes in below the purchase price, buyers typically have several paths forward:

1. Renegotiate the Purchase Price
Many buyers request that the seller adjust the price to match the appraised value. In buyer-friendly markets, sellers are often more open to this—especially if they want to keep the deal together.

2. Ask for Seller Concessions
Sometimes sellers won’t reduce the price fully, but may offer closing cost concessions or credits to make the purchase more affordable overall.

3. Bring Additional Funds to Closing
If the buyer still wants the home at the agreed price, they can choose to pay the difference between appraised value and purchase price out of pocket.

4. Challenge the Appraisal
If there’s strong evidence the appraisal missed key information, buyers can dispute it. This may involve submitting additional comps, pointing out overlooked upgrades, or correcting errors in the report.

A Low Appraisal Isn’t Always a Bad Thing

While it can be frustrating, a low appraisal can also protect buyers from overpaying. It creates an objective checkpoint—helping ensure the purchase aligns with current market value, not just emotion or competition.

Bottom Line

A low appraisal is not a reason to panic. It’s a solvable issue, and in many cases, buyers and sellers come to a reasonable agreement. With the right approach, buyers can stay calm, stay strategic, and still move forward successfully—even when the appraisal doesn’t come in as expected.

For the full roadmap and answers to related buyer questions, visit the Buyer’s Guide to Buying a Home in Today’s Market