What Happens When a Home Appraisal Comes in Lower Than the Contract Price?

The Appraisal Came in Low. Now What?

You've negotiated a purchase price, signed a contract, and started moving toward closing.

Then the appraisal comes back below the agreed purchase price.

Does that mean the transaction is over?

Not necessarily.

Why Does an Appraisal Matter?

For many financed purchases, the lender requires an appraisal to help evaluate the property's value as collateral.

If the appraisal is lower than the contract price, the lender may calculate the loan amount using the lower appraised value, subject to the loan program's rules.

This can create a financing gap.

Can the Buyer and Seller Renegotiate?

Yes, the parties may agree to negotiate a revised price or other terms.

However, neither party is automatically required to accept a change simply because the appraisal is low.

The contract and applicable addenda determine the parties' rights and obligations.

Can the Buyer Pay the Difference?

In some situations, a buyer may contribute additional funds to address the gap.

Whether that is practical depends on available cash, financing requirements, and the buyer's financial priorities.

Can the Appraisal Be Reconsidered?

If there are factual errors or relevant comparable sales that were overlooked, the lender may have a process for requesting reconsideration of value.

A higher valuation is not guaranteed.

Can the Buyer Terminate?

Potentially, depending on the contract, financing provisions, appraisal-related addenda, applicable deadlines, and other circumstances.

Buyers and sellers should carefully review their contractual rights with their real estate professional and seek legal advice when necessary.

Why Skilled Representation Matters

Low appraisals can create stressful negotiations.

An experienced agent can help evaluate market evidence, communicate potential solutions, and keep the parties focused on their contractual obligations and goals.

Sam Calhoun emphasizes preparation, clear communication, and strategic negotiation throughout the transaction.

Buying or selling a home in North DFW? Connect with Sam Calhoun, Real Estate Advisor with Real Broker, LLC, for knowledgeable guidance from contract to closing.

 

 

About Sam Calhoun

Sam Calhoun | Real Estate Advisor | Real Broker, LLC

Serving Lantana, Argyle, Flower Mound, Colleyville, Southlake, Grapevine, and surrounding Dallas-Fort Worth communities.

Sam Calhoun believes exceptional real estate service begins with a higher level of strategy, communication, and personal attention. Whether you're purchasing your first home, selling a luxury property, relocating, or looking for a fresh approach to a home that hasn't sold, Sam provides personalized guidance focused on helping you make informed decisions.

With an emphasis on strategic pricing, innovative marketing, and skilled negotiation, Sam works to make the buying and selling experience as seamless and successful as possible.

Buying, selling, or exploring your options? Connect with Sam Calhoun to start the conversation.

Sam Calhoun | Real Estate Advisor

Real Broker, LLC

sam@calhounre.com

www.calhounre.com

720-515-3130