What Happens If a Home Doesn’t Appraise

When a home is under contract, the lender orders an appraisal to confirm that the purchase price aligns with the property’s market value. If the appraisal comes in lower than the agreed price, it can create challenges—but it doesn’t always mean the deal is over.

If a home doesn’t appraise, the lender will typically base the loan amount on the appraised value, not the contract price. This means the buyer may need to bring additional cash to cover the difference if they still want to proceed at the original price.

Another option is renegotiation. Buyers and sellers can revisit the price and agree to adjust it closer to the appraised value. In some cases, sellers may offer concessions or credits instead of a price reduction.

Buyers can also challenge the appraisal if there are errors or missed comparable sales. While appraisal reconsiderations aren’t guaranteed, they can be successful if supported by strong data.

If no agreement is reached, the buyer may choose to walk away, depending on the appraisal contingency in the contract. This protects buyers from being forced to overpay.

An appraisal shortfall can be stressful, but it’s a common part of real estate transactions. Understanding the options helps both buyers and sellers respond calmly and strategically.