What to Do If the Appraisal Comes in Low in 2026
A low appraisal in 2026 is not the end of a deal—it is a signal that the lender will not lend on the full contract price and that buyer and seller need to decide how (or whether) to bridge the gap.
What a Low Appraisal Actually Means
The lender bases your loan on the lower of the purchase price or appraised value.
Example:
Contract price: 500,000
Appraised value: 480,000
The lender will usually treat the home as worth 480,000, which creates a 20,000 appraisal gap that has to be addressed before closing.
Low appraisals typically happen because the price was aggressive, recent closed sales do not fully support it, the appraiser selected different comps than expected, or the property has unique features that are hard to quantify.
Your Main Options When the Appraisal Is Low
In real‑world 2026 deals, buyers and sellers usually choose one of these paths (or a combination):
1. Renegotiate the Price (Most Common)
The seller reduces the price to the appraised value or closer to it.
Keeps the buyer’s financing intact.
Avoids starting over with a new buyer who may get the same result from their lender.
Often makes sense in more balanced or cooler segments of the market.
Many guides describe this as the simplest, most practical solution when everyone still wants the deal to close.
2. Buyer Covers the Gap With Cash
The buyer brings extra cash to closing to make up the difference between appraised value and contract price.
Using the example above:
Lender lends based on 480,000.
Buyer still pays 500,000 total.
The extra 20,000 is added to the buyer’s cash to close (effectively increasing their down payment).
This can make sense if:
The buyer has the cash and is comfortable using it.
They believe the home is worth it and are confident in long‑term value.
The payment and reserves still feel safe.
In hotter micro‑markets, this is often what wins highly competitive homes, sometimes formalized as an appraisal gap clause where the buyer pre‑commits to cover a gap up to a set amount.
3. Split the Difference
Buyer and seller meet somewhere in the middle—for example, the seller drops 10,000 and the buyer brings 10,000 extra cash.
This is extremely common because:
It spreads the financial impact.
It keeps the deal intact when both sides are motivated.
It often reflects the reality that appraisals are estimates, not absolute truth.
4. Challenge the Appraisal
If you and your agent believe the appraisal missed key comps or contains errors, you can:
Ask the lender for a Reconsideration of Value (ROV).
Provide better comparable sales, point out factual mistakes (square footage, bedroom count, missed upgrades), or note any relevant timing issues.
This does not always work, but it can sometimes move the value up enough to shrink or eliminate the gap. Lenders are increasingly expected to have clear, nondiscriminatory ROV processes that allow borrowers to challenge inaccuracies or potential bias.
5. Walk Away (If Your Contract Allows It)
If no agreement can be reached and the numbers no longer make sense, the buyer may choose to terminate under an appraisal contingency or financing contingency and recover their earnest money.
This is not a failure; it is a decision to avoid a deal that no longer fits your risk tolerance or budget.
The Biggest Mistake People Make
The biggest mistake on both sides is reacting purely emotionally:
Buyers deciding they “must” have the house at any cost and draining savings or taking on risk they are not comfortable with.
Sellers treating the appraised value as an insult and refusing to engage with what the lender’s data is actually saying.
A low appraisal is not a verdict on your worth or your taste. It is a data point from the lender’s perspective and a starting point for negotiation.
The more useful question is:
“Given this number and this market, what solution makes financial sense for both sides?”
How to Think About It as a Buyer
Ask yourself:
Do I have the extra cash—and do I want to use it here?
Would I still feel good about this purchase if the market stayed flat for a while?
How does this home compare to others at or near the appraised value?
Is this a unique opportunity, or could I find something similar without stretching?
Does covering the gap leave me with enough reserves for repairs and life?
Your job is not just to keep this deal alive; it is to protect your long‑term financial comfort.
How to Think About It as a Seller
Ask yourself:
If this buyer walks, is the next buyer’s lender likely to use the same comps and land at a similar value?
How strong is demand in my price range right now?
What will it cost me—in time, carrying costs, and stress—to go back on the market?
Is this net result, even with a price adjustment or credit, still acceptable compared to my alternatives?
In many 2026 markets, appraisals have become less of a rubber stamp and more of a real checkpoint, so sellers who plan for that reality tend to move through it more smoothly.
Want Help Navigating a Low Appraisal?
If you are in the middle of a deal and an appraisal just came in low—or you want to structure offers and pricing to be better prepared—you can book a quick call with Shaina McAndrews, Realtor, and walk through your specific numbers and options:
If you are planning to sell and want to price and position your home to reduce appraisal risk, start by getting a realistic, data‑driven view of your home’s value here:
A low appraisal in 2026 rarely has to kill a deal. With clear thinking, good information, and a willingness to negotiate, most buyers and sellers can find a path forward that protects both the transaction and their long‑term goals.
