Problems & Fixes
What Happens if the Appraisal Comes in Low
Why appraisals come in below the contract price, the five options buyers and sellers have, and how a reconsideration of value works.
Updated 2026-08-24| Applies to: Buyers under contract, sellers, and homeowners refinancing.
The short answer
A low appraisal means the lender will base the loan on the appraised value, not the contract price. You can renegotiate, bring the difference in cash, split it with the seller, request a reconsideration of value, or cancel if your contract has an appraisal contingency.
A low appraisal is a value problem, not a loan denial. The lender simply will not lend against a number the appraiser did not support.
Why it happens
- Limited comparable sales in the neighborhood or an unusual property
- A fast moving market where recent sales lag current offers
- Condition issues the appraiser had to account for
- Renovations that do not return their full cost in value
- Multiple offers pushing the contract price above recent sales
Your five options
| Option | What it means |
|---|---|
| Renegotiate | Seller reduces price to the appraised value |
| Bring cash | You cover the gap out of pocket on top of your down payment |
| Split the gap | Both sides move part of the way |
| Reconsideration of value | Submit additional comparable sales for review |
| Cancel | Available when the contract has an appraisal contingency |
How a reconsideration of value works
Your agent gathers recent closed sales that are genuinely comparable in size, age, condition and location, and the lender submits them for the appraiser's review. Success rates are modest, and the strongest cases involve a clear factual omission or a better comparable that was available at the time.
Refinances are different
There is no seller to negotiate with. A low value on a refinance usually means a smaller loan amount, a different program, keeping mortgage insurance, or waiting.
Appraisal outcomes and lender options vary by program and situation. This is general education, not a commitment to lend.
Common mistakes to avoid
- Waiving an appraisal contingency without cash available to cover a gap
- Sending emotional arguments instead of comparable sales in a reconsideration
- Assuming the lender can simply use the contract price
Frequently Asked Questions
People also ask
What does PITI stand for?
PITI stands for principal, interest, taxes, and insurance, the typical components of a monthly mortgage payment estimate.
Read: How Much House Can I Afford?What is an adverse action notice?
It is a written explanation, generally required by law, that outlines the main reasons a credit or loan application was denied.
Read: What Happens If My Mortgage Application Is Denied?How is home equity calculated?
Home equity is your home's current market value minus your remaining mortgage balance and any other liens against the property.
Read: How to Build Home Equity FasterIs an appraisal the same as a home inspection?
No. An appraisal establishes value for the lender and flags certain conditions. An inspection is a detailed review for your benefit as a buyer.
Read: Appraisal Repairs and Property Condition RequirementsCan I remove my escrow account?
Some loans allow escrow waivers, often with sufficient equity and a fee, and government backed loans generally require escrow. It depends on the loan.
Read: Why My Mortgage Payment ChangedHow often do closings get delayed?
Delays are common enough that most agents plan for them. Most are days, not weeks, when issues surface early.
Read: What Actually Slows Down a ClosingTerms used in this guide
- Appraisal
- An independent opinion of a property's market value, ordered by the lender and based largely on comparable sales.
- Loan to Value
- The loan amount divided by the property value. A $200,000 loan on a $250,000 home is an 80% LTV.
- Market Value
- The price a willing buyer and seller would agree to under normal conditions, estimated through comparable sales.
Written by
Manny Oloyede, Mortgage Broker
NMLS #1824463 | Ultimate Mortgage Brokers LLC NMLS #2619461 | Licensed in OH | KY | NC | PA | SC | TN | TX
I have worked in mortgage lending since 2018 out of the Akron / Cuyahoga Falls Branch, helping buyers, homeowners and investors across Northeast Ohio and every state where I am licensed. These guides reflect the questions I answer most often, written the way I would explain them on a call.
Keep reading
Appraisal Repairs and Property Condition Requirements
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Problems & FixesWhat Actually Slows Down a Closing
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