What Happens If a Home Doesn’t Appraise

A low appraisal can catch both buyers and sellers off guard, especially when a deal is already in motion. While it can create challenges, a home that does not appraise does not automatically mean the transaction is over.

Why Homes Don’t Appraise at Contract Price

Appraisals are based on recent comparable sales, market conditions, and property condition. In competitive or fast-moving markets, prices can rise faster than closed sales, making it difficult for appraisals to keep up.

Unique properties or limited comparable data can also impact valuation.

What a Low Appraisal Means for the Buyer

Lenders typically base the loan amount on the appraised value, not the contract price. If the appraisal comes in low, there is a gap between what the lender will finance and the agreed purchase price.

That gap must be addressed before the loan can proceed.

Common Options When an Appraisal Comes in Low

Buyers and sellers usually have several options:

• Renegotiate the purchase price

• Split the difference between buyer and seller

• Buyer brings additional cash to closing

• Request a reconsideration of value if errors exist

• Cancel the contract, depending on contingencies

The right choice depends on contract terms and market conditions.

The Role of Appraisal Contingencies

Many contracts include an appraisal contingency that protects buyers if the home does not appraise. This allows buyers to renegotiate or walk away without penalty.

Without this contingency, buyers may have fewer options.

How Sellers Typically Respond

Sellers may choose to adjust the price or risk facing the same issue with future buyers. In many cases, a low appraisal reflects market data, not a problem with the home.

A practical response often keeps the deal moving.

How Agents Help Navigate Low Appraisals

Experienced agents review appraisal reports for errors, missing data, or inappropriate comparables. In some cases, providing additional information can lead to a revised valuation.

Agents also guide negotiations to find workable solutions.

Does a Low Appraisal Affect Future Sales?

If a deal falls through, future appraisals may still reflect similar values unless new comparable sales support a higher price.

This is why addressing appraisal issues thoughtfully matters.

The Bottom Line

A home that does not appraise presents a challenge, not a dead end. With clear communication and realistic expectations, many transactions still close successfully.

Understanding the process helps buyers and sellers respond calmly and strategically.