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What Happens If The Home Appraisal Comes In Low?

#thekeringroup #appraisals #homeloan #realestate What Happens If the Home Appraisal Comes in Low? One of the most stressful moments in any real estate transaction happens when the home appraisal comes back lower than the agreed-upon purchase price. Buyers worry their loan won’t go through, and sellers fear the deal might fall apart. So what really happens when an appraisal comes in low? Let’s break it down. What Is a Home Appraisal? A home appraisal is a professional opinion of a property’s market value, completed by a licensed appraiser and required by the lender. The lender uses it to make sure the home is worth what they’re lending. If a buyer is paying $400,000 for a home but the appraisal comes back at $370,000, the bank will only lend based on the $370,000 value — not the contract price. That’s where problems begin. Why Do Appraisals Come in Low? Low appraisals happen more often than people realize, especially in fast-moving or changing markets. Common causes include: The home was overpriced Comparable sales (comps) don’t support the price The market is cooling or shifting The home is unique or hard to compare Appraiser missed upgrades or features In hot markets, buyers often pay above recent sales — but appraisers can only use closed sales, not future trends. What Happens When the Appraisal Is Lower Than the Price? When the appraisal comes in low, the lender will not approve the full loan amount based on the contract price. That means someone has to make up the difference — or the deal changes. Here are the main options. 1. The Buyer Brings More Cash The buyer can choose to pay the difference out of pocket. Example: Price = $400,000 Appraisal = $370,000 Difference = $30,000 The buyer would need to bring an extra $30,000 in cash (on top of their down payment). This only works if the buyer has the funds — and feels the home is worth it. 2. The Seller Lowers the Price Often, the seller agrees to reduce the price to match the appraisal. This is common in balanced or buyer-leaning markets because: The next buyer will likely get the same appraisal The home may not sell for more anyway Lowering the price keeps the deal alive. 3. The Buyer and Seller Meet in the Middle Sometimes both sides compromise. For example: Seller drops the price $15,000 Buyer brings $15,000 extra This is often the fastest way to save the deal. 4. The Buyer Challenges the Appraisal If the appraisal is clearly wrong, the buyer’s agent can submit: Better comparable sales Missing upgrades Errors in square footage or features This is called a Reconsideration of Value (ROV). It doesn’t always work — but when appraisers miss something, it can fix the problem. 5. The Buyer Walks Away If the contract includes an appraisal contingency (most do), the buyer can legally cancel and get their deposit back. This happens when: The buyer doesn’t want to bring more cash The seller won’t lower the price Why Low Appraisals Matter So Much A low appraisal can: Kill a deal Force price reductions Delay closing Cost buyers thousands more Hurt sellers who overpriced That’s why correct pricing from day one is so critical. How to Avoid a Low Appraisal The best protection is smart pricing and expert guidance. A strong real estate agent will: Price your home based on real data, not emotion Track market shifts Prepare appraisal packages Know how to challenge bad valuations Final Thoughts When a home appraisal comes in low, it doesn’t automatically mean the deal is dead — but it does force a decision. Someone has to adjust: The buyer The seller Or the price With the right strategy and negotiation, most low appraisals can be overcome. But the key is working with an experienced agent who knows how to protect your bottom line. FOLLOW US ⇢ Subscribe!    / @thekeringroup   ⇢ Facebook:   / thekeringroup   ⇢ Instagram:   / kerinrealty   ⇢ Twitter:   / kerinrealty   ⇢ Google+: https://plus.google.com/u/0/b/1141369... For all your Tampa Real Estate Needs!! - http://www.TheKerin.com If you're relocating to Tampa or just visiting, be sure to check out our other channel for AWESOME food & fun! Go to http://www.FunTampa.com ⇢ Subscribe!    / funtampa   ⇢ Facebook:   / funtampa   ⇢ Instagram:   / funtampa   ⇢ TikTok:   / funtampa