You are under contract, the appraisal comes back, and the number is below your agreed purchase price. It is a stressful moment, but it is also a common one — and it is rarely the end of a deal. Here are the practical paths forward. All figures here are illustrative and subject to change; this is not a commitment to lend.
Why it matters
Your lender will not lend on a value higher than the appraisal supports. So if you agreed to pay more than the appraised value, there is a gap between the price and what the loan will cover. That gap has to be resolved one way or another before you can close. The good news is you have options.
Path 1: renegotiate the price
The most straightforward route is to take the appraisal back to the seller and ask them to lower the price to the appraised value, or somewhere closer to it. The appraisal is independent third-party evidence, which gives the conversation weight. A seller who wants the deal done — and who knows the next buyer's lender will likely see the same value — often has reason to come down.
Path 2: cover the gap with cash
If you want the home and have the funds, you can bring additional cash to cover the difference between the price and the appraised value. You are still getting the loan based on the appraised value; you simply make up the shortfall out of pocket. This is where an appraisal-gap clause in your original offer comes in — it states in advance how much of a gap you are willing to cover.
Path 3: meet in the middle
Often the resolution is a negotiation: the seller comes down some, you bring some cash, and you split the difference. Neither side gets everything, but the deal survives. This is probably the most common real-world outcome.
Path 4: dispute the appraisal
If you believe the appraisal missed the mark — overlooked recent comparable sales, got the square footage wrong, or failed to account for upgrades — you can request a reconsideration of value. This means submitting specific, factual evidence (typically stronger comparable sales) for the appraiser to review. It does not always change the number, but a well-documented case sometimes does.
The contingency safety net
If you cannot reach a workable resolution, your financing or appraisal contingency may allow you to exit the contract and recover your earnest money, depending on how the contract is written. That is exactly what the contingency is there to protect.
The Alliance take
A low appraisal is a problem to solve, not a catastrophe. We walk clients through all four paths calmly and help assemble a reconsideration case when the evidence supports one.
Facing a low appraisal? Reach out and we will map your options.