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What Happens If Your Home Appraises for Less Than the Selling Price?

When you're in the middle of a real estate transaction, one of the most crucial steps is the home appraisal. But what happens when the appraisal comes in lower than the agreed-upon sale price? It’s called an appraisal gap, and it can be a deal-breaker—or a negotiation opportunity—depending on how you handle it.


Why Appraisals Matter

Lenders use appraisals to determine a home's fair market value. If the appraisal is lower than the offer price, the lender will only finance up to the appraised amount—not the higher sale price. This creates a financial gap that needs to be addressed.


Common Reasons for Low Appraisals

  • Rapidly changing market conditions

  • Overpricing by sellers

  • Lack of comparable sales (comps)

  • Appraiser unfamiliar with the local area


Options for Buyers

1. Cover the Difference in CashIf you're financially able, you can make up the difference between the appraised value and the sale price out-of-pocket.

2. Renegotiate the Purchase PriceMany buyers ask the seller to lower the price to match the appraisal. Sellers may agree, especially in a balanced or buyer-friendly market.

3. Split the DifferenceA compromise where both parties adjust their expectations. The seller lowers the price slightly, and the buyer contributes some extra cash.

4. Challenge the AppraisalYour agent can help you request a reconsideration of value by providing better comps or highlighting appraiser errors.

5. Walk AwayIf your contract includes an appraisal contingency, you can exit the deal without losing your deposit.


Options for Sellers

1. Lower the PriceIf you’re motivated to close the sale quickly, adjusting the price might be your best bet.

2. Request a Second AppraisalIf you believe the appraisal was unfair or inaccurate, you can dispute it or request a new one (with lender approval).

3. Offer Seller ConcessionsYou might offer to cover part of the buyer’s closing costs to help offset their extra cash requirement.


How to Avoid Appraisal Gaps

  • Price your home correctly using a comparative market analysis (CMA).

  • Stage and present your home well to showcase value.

  • Choose a local real estate expert who understands your neighborhood and market trends.


Final Thoughts

A low appraisal doesn’t have to derail your transaction—but it does require flexibility, strategy, and communication. Whether you’re buying or selling, working with a skilled real estate agent can make all the difference in how you navigate the challenge.


Scott Sweeney

Your NorCal Realtor

M&M Real Estate

BRE Lic# 01938720

Cell: Call/Text 707-330-2324


About Scott Sweeney


SweeneySells

Full Time Realtor 13 Years +

Over 100 Families Served

Top 5% Producing Agent

Buying & Listing Specialist

Contract & Negotiation Ninja

CSUS Business & Marketing Graduate 2006


With quickly serving over a 100 families, Scott Sweeney has become a top 5% producing Realtor in the greater Sacramento area who has helped clients from the Bay Area to South Lake Tahoe. Scott has a Bachelor Of Science in Business Administration, with a concentration in Marketing from CSUS. His education, and extensive background in the hospitality, marketing, and real estate industries, have helped Scott to become one of the leading, and most sought after agents in the area.


Reach out to SweeneySells today, and take the first step towards your real estate goals!

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