Q: What Happens if an Appraisal Comes in Low?

Here’s what happens when an appraisal comes in low.


Our real estate market has been red-hot recently, and as a result, more and more sellers are asking me an important question: What happens if the appraisal comes in low?

For example, say you list your home at $450,000, receive multiple offers for it, and the price gets bid all the way up to $480,000. The problem is, banks only make loans for homes based on their appraised value, so if an appraiser appraises the home for $465,000 after the fact, you’re left with a $15,000 difference.

If you do get multiple offers for your home, you must select an offer you believe will close.

What happens next? You renegotiate with the buyer. They could pay the extra $15,000 in cash, you could reduce the price by $15,000 to the appraised value, or you two could meet in the middle. In this case, that’s $472,500, so the buyer would pay an extra $7,500 and you’d drop the price $7,500. 

However, if the renegotiation fails, the deal could get canceled. That’s why, if you do get multiple offers for your home, you must select an offer you believe will close—one that will meet the appraisal amount and have a good lender financing it. Additionally, if the buyer states in their offer that they’ll pay a certain amount (e.g., $5,000) above the appraised value, that’s all the better. 

One way my team and I avoid this situation is by meeting with an appraiser before they make their appraisal. I meet them at the house and bring comparable sales of local homes and a list of upgrades with associated costs that the seller has made to the house. I also tell them how many offers the home has and how many are over list price. That being said, you never know what can happen. Three different appraisers can calculate three different appraisal amounts for the same house. 

If you have questions about this topic or are thinking of listing your home soon, don’t hesitate to reach out to me. I’m here to help.