What Happens if Your House Doesn’t Appraise For the Contract Price?

Real Estate Broker/Owner with Cam Realty and Property Management

What Happens if Your House Doesn’t Appraise For the Contract Price?

If there’s financing, it’s common to have an appraisal contingency in the contract. In most cases, the appraisals come in just fine but then, there are those instances that can cause the contract to fall apart.
There are many reasons why the home doesn’t appraise. The rapidly changing market is one of them. In rare occasions, the appraisal report may be flawed. I’ve seen this happen a few times. Remember, each appraiser may use different comps, some may not see a value in the Lakeview, some may not measure the home correctly.

The first thing to do is for your agent to examine the appraisal report to ensure everything was reported correctly. If the report indicates “no upgrades within the past ten years” and the homeowners had recent renovations, the price will point in a different direction.
Buyers and sellers don’t want to hear “the house didn’t appraise”, they want solutions. There are several options;


-Re-negotiate- everyone who’s involved in the transactions would like to get to the closing table. When there’s a will, there’s a way. It’s time to get creative and see how everyone can give a little to make it work. Sometimes, buyers will just pay the difference as they love the home so much. Sellers may come down on the sale price to make it work.

-Talk to the lender- your agent can certainly contact the lender and provide them with supporting documents showing the value. Keep in mind, this may not always work but it’s worth a try.

-Ask for a second appraisal- some lenders may accept a second appraisal, again, it’s worth asking.

In rapidly changing markets, home prices continue to increase which is something appraisers should take into consideration, however, it doesn’t always happen.
The reason why your house didn’t appraise doesn’t necessarily mean it was overpriced. There are many other reasons. If you get the bad news that the appraisal came in lower than the contract price, don’t panic. There’s always a way!

What Happens if Your House Doesn’t Appraise For the Contract Price?



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  1. Gabe Sanders 06/21/2018 11:00 PM
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Marney Kirk
Cummings & Co. Realtors - Towson, MD
Towson, Maryland Real Estate

Great post, Beth. I had an appraisal on a waterfront property with security and gates and private garage parking that the appraiser compared to an inland condo with no parking and no security. I wrote a seven page rebuttal to the appraisal and included valid comparables. The bank ordered the new appraisal right away.

Jun 14, 2018 10:23 AM #21
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co. Notary Services, retired Realtor

This is a serious problem in our City and has been for about 10 years. 1st, with the oil boom, then with our flood, and then several retired or died off. In a City of roughly 50,000 we have NO VA appraisers because they pay so little and ask so much of the appraiser. At one point during the boom appraisals were 6 months out Beth Atalay .

Jun 14, 2018 01:04 PM #22
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Beth still remains your best....bet

Jun 14, 2018 01:19 PM #23
Ricki Eichler McCallum
CastNet Realty - Corpus Christi, TX
Broker,GRI,ABR, e-Pro, TAHS

Get another appraisal or re-negotiate.  Buyers want to buy and sellers want to sell.

Jun 14, 2018 04:48 PM #24
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Hi Beth

Great advice here. Hopefully there won't be a problem but you always have to be prepared, especially with offers above asking, and in a shifting market. Talking with our buyers, or our sellers, about this possibility and the options is important.


Jun 14, 2018 05:02 PM #25
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Getting a second appraisal is pretty slim on the odds. Its best for an agent to present all upgrades with dates, costs and what the upgrade includes in detail.  Presenting all of that, comps, disclosures and making sure the appraiser knows the area and type of home are crucial to getting a good appraisal from the get-go.  Great advice on how to proceed after the results are in!

Jun 14, 2018 09:28 PM #26
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

We just listed a completely remodeled condo. It is by far the nicest in the building, and we spent a lot of money to make it look the way it is. We know that it would not appraise, and we state in the listing that it would not appraise.

So, either it could be cash, which is common for vacation properties in the area or the Buyer would have to bring way more money to the table to cover the difference.

Funny but after we sell, there will be no problem appraising other even overpriced units.

Jun 14, 2018 09:50 PM #27
Kat Palmiotti
Grand Lux Realty, Monroe NY, 914-419-0270, kat@thehousekat.com - Monroe, NY
The House Kat

Yes, there are options to pursue if the appraisal comes in low. Good advice!

Jun 15, 2018 04:10 AM #28
Shirley Coomer
Keller Williams Realty Sonoran Living - Phoenix, AZ
Realtor, Keller Williams Realty, Phoenix Az

We definitely want to review the report if the property doesn't appraise, although getting the appraiser to reconsider can be a challenge.  A low appraisal isn't necessarily a deal killer. We need to have the conversations with our buyers and sellers so they understand there is a plan should a low appraisal happen.

Jun 15, 2018 06:24 AM #29
Bob Jakowinicz
National Realty Centers Livonia--Bob Jakowinicz - Livonia, MI
Michigan Real Estate Agent-- MI RE Adventures

Seems to be happening less and less in our Michigan Market.  This was a pretty common occurence when things first started rebounding after the recession.  As you mentioned many times this can be worked out but every once in a while it may cause the transaction to fall apart.  I had a listing accept an offer for $250,000 in the first two days on market, appraisal came in at $200,000--- we lost the transaction after all the looking into we could do (both buyer and seller).  Put back on market accepted an offer of $245,000 and appraisal came in at $245,000 and we closed no issue.  Both appraisals were completed within 30 days of each other.  

Jun 15, 2018 07:50 AM #30
Jim Paulson
Progressive Realty (Boise Idaho) www.Progressive-Realty.info - Boise, ID

I have been successful on a few occaisions of discussing with the appraiser, or his/her management, to show why I felt they missed important factors or made an error in their adjustments and have had the value increased.  You can't just tell them you think they might be wrong, you have to take them down the path with data and comps to prove it.

The main things I have found to be in error were:  too old of comps and not adjusted for raising market prices since the sale (i.e. maybe it was a home that closed recently, but was under contract for six months); using comps that were not close to the same sq. ft. and using incorrect price per sq. ft. adjustments for the difference; lot size adjustments; age & condition of comps; etc.

Do not argue with the appraiser since you will have to work with them again, but try to approach the difference on a professional level.  

Jun 15, 2018 08:21 AM #31
Tim Maitski
Atlanta Communities Real Estate Brokerage - Atlanta, GA
Truth, Excellence and a Good Deal

As a buyer's agent, the answer is so easy.  Just have the seller reduce the contract price :)

Jun 15, 2018 01:06 PM #32
Ann Wilkins
Golden Gate Sotheby's International Realty - Oakland, CA
Oakland, Berkeley, Piedmont CA

In our area where it is very competitive, the listing agents prefers  offers with large down payments and no appraisal contingency.  Houses usually appraise but now and then they don't.  Had to renegotiate one deal but in the other, the buyers got another lender and that appraisal came in at the sales price.  It isn't always so much the comps but it is the "adjustments" that can skew an appraisal.  If the subject home is smaller than the comps, and the appraiser uses a very high cost per square foot than your smaller home can come in under value.  The adjustment values i.e. cost per sq ft land or building seem to vary by appraiser.  So even if they used the same comps, appraisers will have different values. 

Jun 15, 2018 04:02 PM #33
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Most buyers wouldn't pay a higher price than what an appraiser reports, would you? Some buyers will pay the difference, however, the premium might be less than their offer or the neighborhood. Perhaps L3 is more important than the cost of their opportunity.

Buyers who are competing with multiple offers should know the negotiating parameters and contingency plans if the appraisal is below their offer. However, pushing the pause button instead of the panic button should be reflexive as breathing and hopefully gets everybody to the closing table.

Jun 15, 2018 07:15 PM #34
John Wiley
Right Move Real Estate Group- EXP Realty - Fort Myers, FL
Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA

Great post Beth.

I have only had one appraisal come in under the offer.

It was $10,000 under. I did not feel the home was worth paying the extra at closing but the buyer really wanted it. I negotiated with the seller, they came down $7000 and the buyer paid an extra $3000.

Everyone was happy.

Still have no idea why it appraised so low.

Jun 16, 2018 03:04 PM #35
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

This has certainly been happening in my market lately too.  And got an offer today with financing that I feel might go down the same path. Worried.  Not sure if either party can do anything about it if it will die a painful contract death.

It's so hard to get prices on an upward direction without a few cash deals tossed in in my market.  Thankfully we're expecting a couple of those.

Jun 18, 2018 09:10 AM #36
Karen Feltman
Cedar Rapids/Iowa City, IA KW Legacy Group - Cedar Rapids, IA
Relocation Specialist in Cedar Rapids, Iowa

This is happening more in every price point as we are seeing multiple offers that are above the asking price.  I counsel my buyers and sellers the same way.  The appraiser is the only opinion of value that counts when there is a lender involved.  Buyers are thrilled when the appraisal is lower, but sellers are not too willing to accept that lower than agreed price. Discussing the appraisal at the time of the listing and again when considering the offer is the key.  Great post.

Jun 18, 2018 03:58 PM #37
Sharon Tara
Sharon Tara Transformations - Portsmouth, NH
New Hampshire Home Stager

Congratulations on a well deserved feature!

This is the primary reason we chose the buyer for our home. They were cash buyers and the other offer, although higher, required financing and we couldn't risk the appraisal not matching the amount.

Jun 20, 2018 09:40 AM #38
Michelle Carr Crowe,Altas Just Call...408-252-8900!
Get Results Team...Just Call (408) 252-8900! . DRE #00901962 . Licensed to Sell since 1985 . Altas Realty - San Jose, CA
Family Helping Families Buy & Sell Homes 40+ Years

I hate when this happens. It's important to remember, "Buyers and sellers don’t want to hear “the house didn’t appraise”, they want solutions."

Jun 22, 2018 12:13 AM #39
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Jun 26, 2018 12:38 AM #40
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Beth Atalay

Cam Realty of Clermont FL
Sell or Buy Homes in Clermont FL
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