What happens if a home doesn't appraise?

A low appraisal means the appraiser determined the home is worth less than what you and the seller agreed to pay. Lenders will typically only finance based on the lower appraised value, which creates a gap that needs to be resolved.

Your options as a buyer:

1. Renegotiate the price The most common resolution. You and your agent present the appraisal to the seller and ask them to reduce the purchase price to the appraised value (or somewhere closer to it). Motivated sellers often agree, because another buyer's lender will face the same issue.

2. Cover the appraisal gap with cash If you can afford to, you can pay the difference between the appraised value and the purchase price out of pocket. This is called covering the appraisal gap. It's more common in highly competitive markets.

3. Request a second appraisal or reconsideration of value If you believe the appraiser missed comparable sales or made a factual error, your lender can request a "reconsideration of value" and provide additional comparable sales data. This sometimes results in a higher revised appraisal.

4. Walk away If you have an appraisal contingency and the gap can't be resolved, you can exit the contract and recover your earnest money.

For sellers: A low appraisal doesn't mean you must lower your price, but it does mean understanding why the appraisal came in low and evaluating what a realistic outcome looks like given current market conditions.