In a rising market, like the one many home buyers are experiencing, it’s possible for buyers to come up short on financing when the appraised home value is less than the agreed-upon sale price. If you found your dream home, this could be your worst nightmare.

While housing prices may not have recovered in cities like Detroit, they are booming in areas like San Francisco and across the U.S. as a whole. Many parts of the U.S. have seen housing prices increase dramatically since 2012.

When this happens, it’s not uncommon for the appraised value of the home to be less than the selling price. Since appraisals look at past homes sold and don’t account for future prices, appraisals will often come in lower than the selling price.

It would be like pricing a tank of gas based on what you paid for it yesterday rather than today’s market conditions.

This might not have been a problem prior to the housing bubble, but since then, most lenders have had their hands tied. It’s tougher to get a mortgage for more than 80% to 90% of the home’s value.

Below are some tips for what you can do to buy your dream home at a fair deal if your appraised value comes back less than the selling price.

Negotiate the selling price again

A lower appraised value can be a good thing in the right conditions. For example, if you find a motivated seller — someone who needs to sell quickly or doesn’t have any other option — then you can get an excellent deal on a home.

A majority of the time, a rising market is a seller’s market, meaning the seller has the upper hand, and negotiating for more favorable terms can be difficult. That’s often because they have multiple offers on their home, and because there is a shortage of homes on the market, and comparable homes have sold for high prices.

To successfully negotiate in any market, you need to know the seller’s hand. In other words, you have to figure out how motivated a seller is. Do they need to get rid of their house quickly because of a job relocation? Did they recently get divorced and just want out of the house? Do they have multiple offers?

The lower the number of offers and the faster a seller needs out, the more motivated they are to sell, and the more power you have for getting favorable terms.

You can find if the seller is motivated through public information like delinquent tax records or divorce records. This information is obtainable through the county, and it can be a hassle sometimes to get the information. But people who recently divorced or have delinquent taxes tend to be more motivated than the average seller.

You can also find out information like how long the seller owned the house or whether or not the owner lives in the house. Sellers who owned a house for more than 10 years are likely to own it free and clear, which means they may be willing to accept a lower price. Also, home sellers who don’t live in the house they’re selling tend to be more motivated than the average seller.

Once you determine how motivated a seller is, you can begin thinking about the new offer you want to propose to the seller.

A motivated seller is likely to drop to the appraised value. An unmotivated seller will likely leave no room for negotiation in terms of price. If this happens, continue reading to find out what to do if the seller won’t budge.

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Dispute the appraisal

Appraising a home is part art and part science. Because of that, it creates room for subjectivity and varying levels of competency, which can lead to different valuations between appraisers.

For example, a recent couple — credit score above 750 — bought a house in 2013 for $130,000 and added $146,000 in renovations. One appraiser quoted them at $315,000 in January 2014.

The lender was slow to get back to them, so the couple applied for a loan on their own. The new appraisal came in at $220,000. That’s a $95,000 difference between the appraisers.

If your appraisal comes in lower than the selling price, call the lender or the appraiser for a copy of the appraisal so that you can look over it to make sure there aren’t any major discrepancies.

When picking through an appraisal, here are four areas of the report you should look through and what you need to be looking for:

• Square Footage Value: Make sure the square footage value in the report is accurate. Rounding errors can create a difference in the estimated square footage of a home. As a buyer, the only way to make sure it’s accurate is to see if the seller, agent or appraiser will remeasure it to make a comparison. A large difference in square footage should throw a red flag.

• Adjustment Section: Check the adjustments for features the appraiser made — or didn’t make. You don’t need to know the value. Adjustments can add thousands of dollars to the value of a home. For example, if a comparable home isn’t on a golf course, but the house you want to buy is, make sure there is an adjustment that increases the value of the home.

• Bedrooms: Double-check that the number of bedrooms is correct. From an appraisal perspective, a bedroom is a room that has a closet. Ask the seller’s agent for this information or your buyer’s agent.

• Comparables: Find what homes were used as comparables. You can look at the report for the homes and access seller information by asking your agent. I’ve seen appraisers unknowingly use a For-Sale-By-Owner as a comparable. These homes tend to sell for less than with an agent, which would drive an appraised valuation down.

Appraisers can come to the wrong value for any number of reasons like they aren’t from the area, there aren’t any good comparable homes, or the appraisal report is done by a junior worker. That’s why it’s important to look over the report.

If you have any doubts, you can ask for a second opinion. It may cost you money and extra time that could increase delayed closing fees, but it’ll save you. If you did the research above, you may be able to request a second appraisal that your lender will pay for.

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When all else fails… make up the difference

If the two tips above don’t work, then you have only one option before walking away — assuming you have put an appraised contingency clause in your purchasing agreement.

The clause lets you walk away without any financial repercussions if the appraised value comes back less than the selling price and the seller is unwilling to negotiate.

Your only option is to make up the difference by paying cash or getting a private mortgage. If you have to do this, don’t just pay the money. An experienced real estate agent should help you get more out of the deal.

You want to try to get extra value for the price. You can get this by asking the seller to include something in the sale that is valuable to you but doesn’t cost much. For example, if you’re a first-time homebuyer, you might ask for the seller to include the appliances since you likely don’t have any.

You can ask for other things like repairs to be done, updates, or any number of things. Of course, a lot of it will go back to how motivated the seller is.

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