What happens if the bank's appraisal comes in lower than the price we agreed to pay for the house?

A low appraisal doesn't automatically mean the deal is dead, and you aren't necessarily forced to bring the entire difference in cash. What happens next depends heavily on the purchase contract and your appraisal/financing contingency. For example, if you agreed to pay $600,000 but the appraisal comes in at $575,000, the lender may base the loan on the lower appraised value. At that point, you generally have a few options: renegotiate the purchase price, split the difference with the seller, bring additional cash, or challenge the appraisal. A reconsideration of value (ROV) may be possible if there are legitimate issues with the appraisal—such as inaccurate property information, missed comparable sales, or factual errors. Your lender is usually the one who handles the process, so I'd work with them and your agent to provide relevant comparable sales and documentation rather than simply arguing that the house is "worth more." You can also ask the seller to reduce the price to the appraised value or meet somewhere in the middle. Whether the seller agrees depends on the market and how motivated they are. In a competitive neighborhood, a seller may have little incentive to reduce the price, particularly if they believe another buyer would pay the contract price. The important thing is to check your deadlines immediately. Your contract may give you specific rights if the appraisal is low, but those rights can be tied to particular contingency and notice deadlines. Don't let those dates pass while you're negotiating. I'd start by having your lender explain exactly how the low appraisal affects your loan amount, then have your agent review your contract and negotiate from there. A low appraisal is a negotiation point—not automatically a reason to walk away or pay the entire gap yourself. Juan Picos Real Estate Agent JohnHart Real Estate

A low appraisal doesn't automatically mean the deal has to fall apart. There are several ways to handle an appraisal that comes in below the contract price. First, review your purchase agreement to see whether you have an appraisal contingency and what rights it gives you. Depending on the contract, you may be able to renegotiate the purchase price, request that the seller reduce the price, or terminate the contract if the appraisal contingency isn't satisfied. You can also ask the lender about a **reconsideration of value (ROV)** if you believe the appraisal contains factual errors or overlooked relevant comparable sales. Your agent can help identify better comps or information that may support the home's value. Another option is for the buyer to bring additional cash to cover some or all of the difference. Some buyers and sellers also agree to split the appraisal gap. The important thing is that you aren't automatically forced to pay the difference. Your options depend on your financing, the appraisal contingency, and the terms of your contract. Talk with your lender and agent as soon as the appraisal comes in so you don't miss any contractual deadlines. Juan Picos Real Estate Agent JohnHart Real Estate

If the bank’s appraisal comes in below the price you agreed to pay, it creates an “appraisal gap.” What happens next depends on your purchase contract and how much you’re financing. Typically the seller and buyer split the difference in some form or another. Keith Jean-Pierre Managing Principal The Dapper Agents Real Estate Operations in ALL 50 States

Jayden, both are on the table. You can ask for a reconsideration of value, and you can also just cover the gap in cash, and most deals that survive a low appraisal end up somewhere between those two. The thing worth doing right now, while you're still waiting, is pulling out your contract and finding out whether you have an appraisal contingency and what its deadline is. That one line decides how much leverage you have later. A challenge only works if you hand the lender something factual. Closed sales the appraiser didn't use, or an error in the report like wrong square footage. Your opinion of the neighborhood won't move it. Ask your agent to have three or four strong comps ready so you're not scrambling if the number comes in short. My license is in California, so confirm the contingency timelines with an agent licensed where you're buying. Alla Novytska, Realtor®, JohnHart Real Estate, DRE #02254775

Jayden, the lender lends against the lower of contract price or appraised value, so a low appraisal does not shrink your loan by the gap amount, it converts the gap into cash you have to bring to closing. Everything else follows from that one fact. Joe already pointed you to the reconsideration of value, which is the right first move. Let me give you the mechanics, because you get one shot at it and most buyers waste it. You are allowed a maximum of one borrower-initiated reconsideration of value per appraisal report. So do not fire off a general complaint. A request that works includes your name, the property address, the effective date of the appraisal, the appraiser's name, the date of your request, and a specific description of what is unsupported, inaccurate or deficient in the report. Then it includes additional data and comparable sales, no more than five, with the source for each, such as the MLS number, and an explanation of why each one supports a different value. It goes through your lender, not directly to the appraiser. What actually wins an ROV: a recent closed sale the appraiser missed, a comp that is genuinely better matched on street, view, lot or condition, or a factual error in the report such as wrong square footage, wrong bedroom count, or a finished basement counted as unfinished. What never wins: "we think it is worth more," or the fact that you have a signed contract at a higher price. Have your agent pull the candidates. This is exactly the work a good agent should be doing for you this week. If the value holds, you have five real options, and they are worth knowing before you are emotional about it. Bring the difference in cash. Simplest, and on a modest gap in a house you want, usually the right answer if it does not strand your reserves. Renegotiate the price down to the appraised value. Point out to the seller, through your agent, that the next buyer's lender will order a new appraisal and is likely to find a similar number, so relisting probably does not solve his problem, it delays it. Split it. The most common landing spot, because it lets both sides feel they held some ground. Change the structure. Sometimes a different loan product or a larger down payment changes the arithmetic. Ask your loan officer to run the alternatives rather than assuming there is only one path. Walk, using your appraisal contingency, if you have one. Read the exact language now rather than later, because it defines your deadline and whether your deposit is protected. Since you said you are worried about this in advance, here is the thing to handle before you are under contract next time, or right now if you are still negotiating. An appraisal gap clause lets you state up front, in the offer, how much of a shortfall you are willing to cover in cash. In a hot neighborhood that clause is often what makes a financed offer competitive against cash, because the seller can see exactly where your ceiling is instead of guessing. The tradeoff is real: you are committing to that money. Never write a number you cannot actually produce, and never write "any amount." One more thing. If your contract is already signed without an appraisal contingency, find that out today, not when the appraisal arrives. That single fact changes every option above. I am a real estate professional, not a lender or an appraiser, so confirm the loan-side mechanics with your loan officer. You did not say where you are buying. Tell me the city and I will connect you with a strong local agent who can pull the comps for an ROV properly, and if it happens to be the Palos Verdes Peninsula or the South Bay in Los Angeles, that is my own market and I am glad to help directly. Reply here either way, Zoltan Peresztegi. Zoltan

If the appraisal comes in low, the lender will only lend against the appraised value, not the contract price. The gap is on you unless you renegotiate or walk under an appraisal contingency (if you still have one). Ways to keep the deal alive: 1. Ask the seller to drop the price to the appraisal (or meet in the middle). 2. Bring cash to cover the difference so your loan still works at the lower value. 3. Challenge the appraisal (reconsideration of value) if your agent and loan officer can show better comps the appraiser missed. That can work, but it is not guaranteed and it takes time. 4. Switch lenders or loan products only if there is a real chance of a different outcome. Do not count on that as plan A. In hot SoCal neighborhoods, low appraisals show up when offers run ahead of recent closed sales. Have your loan officer and agent lined up early so you know your cash cushion and your contingency deadlines before you get the number. This is general info, not a commitment to lend. Your loan officer and agent should run your exact numbers.