Your rights and options when a home is appraised
Chapter 3: when it comes in low
Know this
On a purchase, a low appraisal usually means the lender will lend based on the lower value. You can ask the seller to lower the price, cover the gap with more cash, split the difference, request a reconsideration of value if there are errors, or cancel if your contract allows. On a refinance, you can adjust the loan amount or challenge errors.
Last reviewed against the primary sources listed below.
Purchase options
- Ask the seller to reduce the price.
- Bring more cash to cover the gap.
- Split the difference.
- Request reconsideration if there are factual errors or better comparables.
- Cancel under your contract's appraisal contingency, if you have one.
Risk of overpaying
The CFPB notes it is very risky to buy for more than the appraised value.
Appraisal questions
What is the danger of a buyer waiving the appraisal contingency?
Without it, you may have to cover any gap between a low appraisal and the price or lose your deposit.
What are red flags for home appraisals?
Factual errors, comparables far away or much older, or comparables that differ greatly without clear adjustments.