What happens if the appraisal comes in lower than the offer I accepted?

Short answer: you’re not automatically forced to drop the price, but you also likely can’t keep their earnest money.
Here’s how it usually plays out:
Appraisal contingency: If the buyer has one (most do), they can back out due to low appraisal and get their earnest money back.
Options you have:
Lower price to $530k
Split the gap (meet somewhere in the middle)
Hold firm and risk the deal falling apart
Buyer bringing cash: If they don’t have the $20k, the deal likely won’t close at $550k unless terms change.

Second appraisal: Possible, but rare and not guaranteed to change anything (usually only if there were errors in the first one).

Bottom line: this becomes a negotiation, not a default win for either side.

Most standard purchase agreements/contracts have a provision for this scenario. Typically, the entire contract is contingent upon the buyer's financing (which requires the appraisal). Generally, if the buyer cannot obtain financing, the buyer can exit the transaction without loss of earnest money. Your feeling is valid - they offered $550K and that is what you expect them to pay. Consult your contract. But in reality, you have three options (reduce the price, release the buyer and return to the market, or work out some middle ground). As for another appraisal, that is possible, but limited in that if the loan type is FHA, that appraisal stands - even with a subsequent FHA buyer. With other loan types, the only way the buyer could order another appraisal would be to switch lenders - which is not necessarily recommended as it does not sound like the appraisal you are dealing with is grossly off the mark. It is possible for the appraisal you have to be fully reviewed by you and your agent to ensure nothing was overlooked or mis-stated. If there is an error, or perhaps a missed comp sale, you may have some leverage, but even one missed comp does not necessarily bridge a $20K gap.

If the appraisal comes in lower, the bank will only lend based on that lower value, so there’s a gap that has to be covered somehow. If the buyer has an appraisal or financing contingency, they’re usually not forced to make up that $20K—they can ask you to lower the price, renegotiate, or walk away and get their earnest money back, so you typically can’t keep it in that situation. You’re not forced to drop your price either you can hold firm and let the deal fall apart, or meet somewhere in the middle to keep it together. The buyer can try to challenge the appraisal or even switch lenders to get a new one, but there’s no guarantee it comes in higher. At that point it really comes down to whether you want to work with this buyer or put it back on the market and try again.

Brad, I hear your frustration...you feel the home is worth $550k, but the bank’s opinion is the only one that currently matters for the buyer's loan.

Here’s the hard truth: You likely cannot keep their Earnest Money. If their contract has a standard Appraisal Contingency, that clause is specifically designed to protect the buyer in this exact scenario. If the home doesn't appraise and you can’t reach an agreement on price, they can usually terminate the contract and get their full deposit back.

Your 3 Real Options:

The 'Meet in the Middle' (Most Common): Since they can’t find $20k, see if they can find $10k (maybe from a gift or 401k loan) and you drop your price by $10k.

The Rebuttal: You can ask the lender for a 'Reconsideration of Value.' You’ll need to provide 3 better 'comps' (comparable sales) that the appraiser missed. This is a long shot, but it happens.

Back to Market: You can refuse to budge, the buyer terminates (with their EM), and you find a new buyer. Warning: If the next buyer is also using a loan, you might run into the exact same appraisal ceiling again.

In this market, a bird in the hand is often worth two in the bush. A $10k price drop is often cheaper than two more months of mortgage payments and the 'stigma' of a house going back on the market.

When the appraised value comes in low, and the buyers are not able or willing to make up the difference, it becomes a negotiation with the sellers and buyers to see if there is a potential for a "meet in the middle" scenario. This has worked in our area when this happens, both the sellers and buyers find a workable solution. (not always a 50/50 split in the difference) We have to remember we are working towards a common goal, sellers want to sell, and buyers want to buy at fair market value. If buyers or sellers are not willing to budge, the contract usually falls apart, and the house will go back on the market.

Hi, Was there a Finance Contingency in place with the offer? If they had that protection in place then you cannot keep the deposit. Did they share that appraisal with you? You now have a document showing the value of your home at 530K, and if they walk you will have to answer questions as to why the deal fell apart. Try to keep these buyers if you can!

You’re not forced to drop your price—but the deal can’t move forward at $550K unless the gap is handled.

What’s happening
• Appraisal = $530K
• Contract = $550K
• There’s a $20K gap, and the lender won’t cover it

Your options
• Negotiate (most common) → meet somewhere in the middle
• Lower to $530K → keep deal together
• Walk away → put it back on market

Earnest money

You likely can’t keep it if the buyer has a financing/appraisal contingency (very common in NC). They can usually walk and get it back.

Second appraisal

Possible, but not likely to fix a $20K difference unless the first one was clearly wrong.

Straight advice

Don’t get stuck on the $550K number—focus on:
• Will another buyer appraise higher?
• Do you want to risk starting over?

Most deals like this get worked out with a price adjustment or split.
Let me know if I can help, Tina Clark Realtor at Century 21 Town & Country Realty in Lincolnton, NC.

I have never had an appraiser come in low, but this is why I do my due diligence to accurately provide comps. Now, providing the appraisal was based on a contingency, both the buyer and seller have options.

The buyer has the option to cover the gap. If the buyer is unable to cover the gap, they can either appeal the appraisal, but with unlikely positive results, they can also switch lenders.

If the seller is unable or unwilling, the sales price can also be renegotiated. If that is not an applicable, the next option would be to simply put the home back on the market and try again.

All being said and done, it is okay to offer appraisers your comps that support the listing price.

You are not forced to drop the price. You can release them from the contract.