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How to Handle a Low Appraisal in Today’s Market
By Talk to Annie Real Estate
You’ve negotiated a deal, inspections are done, and things are looking good—until the appraisal comes in low.
In a competitive real estate market like today’s, low appraisals can be an unexpected (and stressful) hiccup. But don’t panic. Whether you’re the buyer or the seller, there are strategic ways to handle it—and I’m here to guide you through every option.
Let’s break down what a low appraisal means and what you can do next.
First: What Is a Low Appraisal, Really?
A low appraisal happens when the home’s appraised value comes in below the agreed-upon purchase price. Appraisals are conducted by licensed third-party professionals, typically on behalf of the lender, to ensure the home is worth the amount they’re loaning.
For example:
- Purchase price: $425,000
- Appraised value: $400,000
- That $25,000 gap needs to be addressed before closing
In this market—where bidding wars, emotional offers, and rising prices are common—it’s happening more than you might think.
For Buyers: Your Options After a Low Appraisal
If you’re the buyer, here are your choices:
1. Renegotiate the Purchase Price
Ask the seller to lower the price to match the appraised value. In a balanced market, sellers are often willing to compromise to keep the deal moving.
2. Split the Difference
You and the seller agree to meet halfway. For example, if the appraisal is $15,000 low, you each cover $7,500 to make it work.
3. Cover the Gap in Cash
If you believe the home is still worth the original offer—or you’re emotionally invested—you can bring extra cash to closing to make up the difference. Just know that lenders won’t finance more than the appraised value.
4. Dispute or Appeal the Appraisal
Sometimes appraisers use outdated or inappropriate comps. If there’s a valid case, I can help gather data and submit a reconsideration of value. It’s not guaranteed, but it’s worth exploring.
5. Walk Away (If Your Contract Allows It)
If you have an appraisal contingency, you can walk away with your earnest money intact. I’ll always review your contract thoroughly so you understand your options before this stage.
For Sellers: What to Do When Your Home Appraises Low
If you’re the seller, here’s how we can respond:
1. Lower the Price to Keep the Deal Alive
In some cases, adjusting the price to match the appraisal is the most straightforward solution—especially if time or market conditions make it risky to relist.
2. Ask the Buyer to Bring Cash
If you’ve received strong interest or multiple offers, the buyer may still be willing to pay over appraised value with cash.
3. Challenge the Appraisal
As your agent, I’ll review the appraisal carefully. If we find missed upgrades, poor comps, or market shifts, we can submit a rebuttal. While not guaranteed, I’ve had success in getting appraisals reviewed and adjusted.
4. Put the Home Back on the Market
If the buyer walks and we’re confident in your home’s value, we can relist and target cash buyers or pre-qualified buyers with larger down payments.
Why It Happens More Often Today
With home values rising fast and bidding wars still common in parts of Central Indiana, appraisals sometimes lag behind market activity. Appraisers use historical data, not buyer sentiment, so their numbers may not reflect multiple-offer enthusiasm.
That’s why working with an experienced agent is crucial—I help price homes smartly, prepare for potential appraisal issues, and build contracts that protect you from surprises.
Final Thoughts: It’s Not a Deal-Breaker—It’s a Hurdle We Can Clear
A low appraisal can feel like a punch to the gut, but with the right strategy, most deals still make it to the finish line. The key is having a knowledgeable, level-headed agent who can navigate the conversation, protect your interests, and advocate on your behalf.
At Talk to Annie Real Estate, I don’t let my clients get blindsided. Whether you’re buying or selling, I’m here to educate you, empower you, and get you across the closing table with confidence.
📞 Let’s talk about how to prepare for appraisal—before it becomes a problem.
Sources:
- National Association of Realtors – Appraisal FAQ
- Fannie Mae – Understanding the Appraisal Process
- Bankrate – What Happens When a House Appraises Low?
Photo Credit: Luxury Presence
