What to Do If the Appraisal Comes in Low

How Low Is "Low"?

A low appraisal means the appraiser valued the home below your agreed purchase price. A $5,000 gap on a $400k home might be manageable. A $30,000 gap is a bigger problem.

Your first step: understand the size of the gap and how it affects your loan-to-value ratio.

Step 1: Review the Appraisal Report

Ask your lender for a copy of the full report. Look for:

• What comparable sales did they use? - Are the comps truly comparable (similar size, age, condition, neighborhood)? - Did they miss recent sales that support your price? - Did they account for upgrades like a renovated kitchen or new roof?

Appraisers make mistakes. If the comps are weak, you have grounds to request a reconsideration of value.

Step 2: Request a Reconsideration of Value (RVS)

Your lender can submit an RVS to the appraiser with additional comps and information. This is not adversarial — you are simply providing more data.

Work with your agent to find closed sales from the last 3 months that support the purchase price. The appraiser may adjust the value, but expect no more than a 5–10% adjustment from the initial number.

Success rate for RVS: roughly 20%. It is worth trying, but have a backup plan.

Step 3: Negotiate with the Seller

Show the seller the appraisal report. Explain that the lender will only lend against the appraised value. Ask them to reduce the price.

• If the gap is small ($5k–$10k), most sellers will reduce to save the deal. - If the gap is large, consider splitting the difference. You cover half, they cover half. - If the seller refuses, you need to decide: pay the gap or walk away.

Step 4: Bring Cash to Cover the Gap

If you really want the house, you can pay the difference in cash. On a $400k offer with a $380k appraisal and 20% down: - Lender lends 80% of $380k = $304k - You need $96k (20% down + $20k gap) - Original plan was $80k down. Now you need $96k.

Make sure you have the cash. Do not raid your emergency fund to cover an appraisal gap.

Step 5: Switch Loan Types

If an FHA or VA appraisal came in low, you cannot easily switch appraisers (FHA and VA appraisals stay with the property for 6 months). But you might switch from conventional to FHA or vice versa, which requires a new appraisal.

This is a last resort option and can delay closing by 2–3 weeks.

Step 6: Walk Away

If the gap is too large, the seller will not negotiate, and you cannot cover it with cash — walk away. Your appraisal contingency lets you do this and keep your earnest money.

A low appraisal might feel like bad luck. But overpaying for a home is worse than waiting for the right deal.

The Bottom Line

A low appraisal is not a disaster. Review the report, negotiate, and know your walk-away number before you start.