What to Do When Your Appraisal Comes In Low | 2026

Home appraisals sometimes come in below the agreed price. If your appraisal came in low, that can be a headache for both sides. Buyers may have to cover the difference, and sellers may have to lower the price.

Several things can happen when an appraisal comes in low. Sadly, most of them aren’t in the buyer’s favor.

Low appraisals are more common when prices are rising fast, but they can happen in any market. And just because an appraisal came back lower than you were expecting doesn’t mean you can’t still qualify for the home.

In fact, there are plenty of actions you can take if an appraisal comes back low.

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The importance of appraisals

If you’re like most homebuyers, then you won’t be paying cash for a home. Instead, you’ll be getting a mortgage through a mortgage lender.

There are tons of steps to getting a home loan, and the home appraisal is one of the most important components of the process.

Whether you are buying or selling a home, appraisals exist for a good reason.

A home appraisal is an impartial professional opinion of how much a home is worth. Without an appraisal, buyers and sellers wouldn’t have an unbiased evaluation of their home’s value and neither side would know what price to negotiate.

An appraisal is used in a purchase and sale transaction to let the lender know that the contracted sales price is supported.

For refinances, appraisals assure the lender that the collateral used for the loan is worth the necessary amount.

Home appraisals in a rising market

It is not uncommon to have low home valuations when home prices are rising quickly.

This is because home appraisals are largely based on comparable home sales that closed prior to the home you’re buying.

In a real estate market where supply can’t keep up with the demand, homebuyers may get into bidding wars. These bidding wars drive prices up.

In hot markets, it becomes virtually inevitable that home values will at some point be unable to keep up with how quickly homes are selling. The result: lower-than-expected appraised values.

It is a common saying in the real estate world that a property is worth whatever someone is willing to pay for it. This may be true to some extent.

However, this logic does not mean an appraised value will be able to support the price someone is willing to pay.

What does a low appraisal mean?

A low appraisal means the property’s value is lower than the sale price to which the buyer and seller have agreed. The appraiser arrives at this number by looking at similar homes that have sold recently and details about the property. 

Unfortunately, a low appraisal can put the brakes on a home purchase. That’s because lenders stick to specific loan-to-value ratios. This means they may not be willing to lend you the same amount anymore. 

What do home appraisers look for?

Home appraisers look for a wide range of things when determining a home’s value. These things include:

• The condition of the home
• The location
• The age of the home
• The home’s structure
• Design of the home
• The home’s size
• Interior layout
• Recent home improvements
• Possible pests
• Any signs of damage
• Required safety features

The appraiser will use this information about the home when looking at comparable homes that have recently sold, or “comps.” Comps are a key part of the appraisal process because they show how the market values similar homes. 

Low appraisal tips

Here are some tips to help if you receive a low appraisal.

Low appraisal tips for the buyer

As the buyer, you have a few options if the appraisal comes back low.

Request a second appraisal

Start by taking a close look at the appraisal report. Request a second appraisal if you find anything missing, like an upgraded kitchen or inaccurate square footage. Every detail counts when determining the value of a home.

Negotiate with the seller

Attempt to negotiate a new sales price with the seller. If they aren’t willing to negotiate, then consider walking away from the deal with your appraisal contingency.

Consider other sources of cash

For those who want to move forward with the home purchase, look for alternative funding sources to cover the appraisal gap, which is the difference between the sale price and the appraisal value. If you don’t have extra cash for more closing costs, consider lowering your down payment percentage and making up the difference that way.

Low appraisal tips for the seller

As a seller, you have the opportunity to try to prevent a low appraisal.

Prepare the home

Before the appraiser comes, clean the interior and exterior of your home. If you’ve been putting off any projects, try to complete them before the appraisal comes.

Document all upgrades

Provide a list of all the upgrades you’ve made to the home. And be ready to answer any questions the appraiser might have.

Price your home appropriately

Additionally, make sure to set a fair asking price. Otherwise, appraisal issues might be inevitable. 

Common reasons for a low appraisal 

A low appraisal can throw a wrench in your home-buying plans. Here are some common reasons why an appraisal may come in low:

• A changing market: A fluctuating real estate market makes an accurate appraisal difficult. If there’s been a recent shift in the market, appraisals may not line up just yet. 
• Inexperienced appraiser: A new appraiser might not have a full grasp of the market. 
• Inaccurate comps: If the comparable properties aren’t similar enough to the property being appraised, then an appraisal could be way off. 
• Missing information: An appraiser that underestimates square footage or doesn’t take recent upgrades into account will arrive at a lower value. 

What you can do if your appraisal comes in low

Be prepared to walk away

Whether you are the buyer or the seller, it can be heartbreaking to have a deal fall apart due to a low appraisal.

When emotions run high, it becomes increasingly difficult to make logical decisions. But remember, this will likely be one of the largest investments you’ll ever make. As such, you need to do everything you can to make rational decisions.

This is when a great real estate agent can be an invaluable asset.

For real estate agents, this is about business. Fall back on them and their expertise to help you make choices that aren’t solely based on emotion.

As painful as it may be, you might even need to prepare yourself ahead of time for the worst-case scenario: walking away.

Renegotiate the purchase price

As a buyer you do not want to pay more than what a home is worth.

Using this logic, it makes sense to ask the seller to drop the price of the home to the appraised value.

This approach may be more realistic if the home has been sitting on the market for several months. For homes that are newly listed, however, the seller may not be as flexible.

Fortunately for the home buyer, there is no guarantee that a buyer after you won’t end up with another low appraisal.

Also, the longer a home sits on the market, the tougher it is to sell at the highest possible price. Sellers are often willing to meet somewhere in the middle and split the difference.

As an example, let’s say the original purchase price was $250,000 but the appraisal came back at $240,000. You may be able to renegotiate with the seller to lower the purchase price to $245,000. You would then need to bring the extra $5,000 to cover the difference between the purchase price and appraised value.

Increase your down payment

If the seller isn’t willing to budge on the price of the home, then your options are limited.

For example, using the same scenario above with a purchase price of $250,000, let’s assume your original goal was to put down $50,000.

$50k down would translate to a 20 percent downpayment, which would get you out of paying private mortgage insurance (PMI).

If the appraisal came back at $240,000, and the seller is not willing to work with you, other than walking away from the deal, you can increase your down payment to $60,000. This will cover the difference in the appraised value, and avoid PMI.

While some would argue that you should never pay more for a home than what it’s worth, it’s important to remember that appraisals are merely opinions of value. A low appraisal doesn’t always reflect the true value of a home.

Also, if homes are appreciating at a rate of 5 percent per year, and this is meant to be your “forever home”, five years from now a home bought for $250,000 would be worth about $320,000.

In the big scheme of things, putting down that extra $10,000 may have paid off in many ways.

Pay mortgage insurance

If you don’t want (or can’t) increase the amount of your down payment, your other option is to keep your downpayment at $50,000 and pay PMI for a few years.

In our example above, if you kept your downpayment at $50,000, this means you’d be covering the difference in the appraised value ($10,000), and then the other $40,000 would result in a downpayment of 17 percent.

Seventeen percent down means you would have to pay PMI. As an example, Freddie Mac says PMI typically costs about $30 to $70 a month for every $100,000 borrowed. On a $200,000 loan, that works out to about $60 to $140 a month, depending mostly on your credit score and down payment. Ask your lender for a quote.

Further, your $200,000 loan would start at about 83 percent of the home’s original value. For PMI rules, that generally means the lower of the price or the appraised value, here $240,000. You can ask your servicer to cancel PMI once the balance is scheduled to fall to 80 percent of that value, or $192,000. On a 30-year fixed loan at a rate between 6% and 7.5%, regular payments get you there in about three to four years.

At those amounts, three to four years of PMI would add up to roughly $2,200 to $6,700.

For some, paying PMI for a few years may be more feasible than coming up with an additional $10,000 right now. Not to mention, paying that extra cost may be well worth getting into your dream home.

Dispute the appraisal

Ask your lender for a reconsideration of value (ROV). It is a standard step: your agent or lender sends the appraiser comparable sales or facts the report missed, and the appraiser may revise the value. Federal regulators finalized interagency guidance on ROVs in July 2024, and the FHA Handbook lets the underwriter request one when the appraiser did not consider relevant information. You may want to evaluate the data and other logistics used for how the appraised value was determined.

To request an ROV, put the request in writing, cite three or more recent comparable sales that are closer to your home in size, condition and date, and ask your lender about its ROV deadline. Rules differ by loan type, so check the FHA and VA requirements with your lender before you count on a specific outcome.

Remember, an appraisal is an opinion of value. Different appraisers may use different comparable sales to derive their value.

Your lender and your agent can offer you advice as to whether the appraiser used the most relevant and comparable sales, and if they feel a value dispute is warranted.

Low appraisals don’t always mean the end of the road

A low appraisal can happen for a variety of reasons. Fortunately, a low value doesn’t have to be a deal-breaker.

Whether you are the buyer or the seller, you should understand how the appraisal process works.

Knowing your options, and working with a good lender and a good agent can be the key to overcoming a low appraised value.

Low appraisal FAQ

Is it a good idea to buy a home in 2026?

If you are considering buying a home in the current market conditions, it might be a good idea. But that depends on your situation. 

For potential home buyers that have saved for a down payment and built a good credit score, buying a home may make sense. Compare current mortgage rates before you decide.  

But if your finances aren’t ready for homeownership, then now is not the right time to buy a home. Buying is a major step and may be a bad match for anyone who’s not financially prepared. 

Are appraisals coming back low?

Appraisals are more likely to come back low where home values are rising quickly, because appraisers rely on sales that closed earlier. Conditions vary by city and neighborhood, so ask your agent how appraisals are coming in locally. 

What are the chances my appraisal comes in low?

CoreLogic found 8.6% of home sales in the closing process were appraised below the contract price in June 2024 (10.7% a year earlier). The share was higher for small starter homes (9.6%). Low appraisals happen in a minority of purchases and are more common when prices rise fast. Your local market may differ. 

Are appraisals keeping up with the market?

When home prices are moving fast, it can be difficult for appraisals to keep up. In October 2021, the Wall Street Journal reported that many home appraisals were not keeping up with soaring prices. 

However, it really depends on your location and the appraiser you get. In some cases, appraisers are keeping up with the housing market. 

Why did my appraisal come in low?

An appraisal can come in low for a variety of reasons. A common reason is a changing market. If the appraisal comes in low, it might mean that the market is slowing down. 

But other reasons can include an inexperienced appraiser, inaccurate comps, or a less than thorough evaluation of the property. 

Is a low appraisal good for the buyer?

A low appraisal can be good for the buyer. In some cases, the seller will accept a lower sale price. And in some cases, the seller is amenable to negotiation. 

But in other cases, the seller will want to stick to the original contract price regardless of the appraisal. As a buyer, you can still move forward with the deal. But you’ll have to bring more cash to closing, which may not be an option. 

What to do if an appraisal comes in low? 

If an appraisal comes in low, take a look at the documentation. Check to see if the appraiser overlooked any important details. If there are missing details, ask your lender for a second appraisal. 

If you cannot have the appraisal amount changed, then it’s time to negotiate with the seller. Some sellers are willing to work with you. But how much room they give you depends on local conditions and how long the home has been on the market. 

If the original sale price stands, then you have two choices. For those with an appraisal contingency, you can walk away from the deal. Or you can bring more cash to the closing table. 

Can the seller back out if the appraisal is low?

Buyers with an appraisal contingency in their offer can back out of the contract when a home appraises low. A low appraisal alone does not usually let the seller back out, but check the terms of your purchase contract. Still, the seller can refuse to negotiate the sales price. 

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