Can You Still Buy a House After a Low Appraisal?

A low appraisal can feel like a major setback when you’re under contract to buy a home, especially if you’re worried the deal might fall through. If you’re asking, can you still buy a house after a low appraisal, the answer is often yes. While a low appraisal can create financing challenges, buyers and sellers typically have several options to keep the transaction moving forward.

In this Redfin guide, we’ll explain what happens when an appraisal comes in below the purchase price, the options available to both buyers and sellers, and how to navigate the next steps with confidence. Whether you’re buying a home in Burnsville, MN or selling a property in Marion, IA, understanding how low appraisals work can help you make informed decisions and avoid unnecessary surprises.

In this article:
What does it mean when a home appraisal comes in low?
Can you still buy a house after a low appraisal?
Option 1: Negotiate a lower purchase price
Option 2: Split the difference between the appraised value and purchase price
Option 3: Cover the appraisal gap with cash
Option 4: Challenge the appraisal
Option 5: Obtain a second appraisal
How buyers and sellers can reduce the risk of a low appraisal
Can you still buy a house after a low appraisal?
FAQs about buying a house after a low appraisal

What does it mean when a home appraisal comes in low?

A low appraisal occurs when a home’s appraised value is less than the agreed-upon purchase price in the sales contract. Because lenders use appraisals to determine how much they’re willing to lend, a low valuation can create a gap between what the buyer agreed to pay and what the lender considers the home to be worth.

• For example, if a buyer agrees to purchase a home for $450,000 but the appraisal comes in at $425,000, there’s a $25,000 appraisal gap. In many cases, the lender will base the loan amount on the appraised value rather than the purchase price, which means the buyer and seller must decide how to address the difference.

A low appraisal doesn’t necessarily mean the home is overpriced or that the deal will fall through. Appraisals are professional opinions based on available housing market data, and factors such as limited comparable sales, rapidly changing market conditions, unique property features, or factual errors in the report can affect the final valuation.

>> Check out: What is a Home Appraisal? Everything You Need to Know About the Process

Can you still buy a house after a low appraisal?

Yes, you can still buy a house after a low appraisal. While a low appraisal can complicate the transaction, it doesn’t automatically end the deal. In many cases, buyers and sellers are able to negotiate a solution that allows the sale to move forward.

The main challenge is that lenders typically base the loan amount on the appraised value rather than the contract price. If the appraisal comes in lower than expected, there may be a gap between what the lender is willing to finance and what the seller has agreed to accept.

Fortunately, there are several ways to address a low appraisal:

• The seller may agree to lower the purchase price.
• The buyer and seller may split the appraisal gap.
• The buyer may cover the difference with additional cash.
• The parties may challenge the appraisal if there are errors or missing comparable sales.
• The buyer may seek financing through a different lender that requires a new appraisal.

>> Read more: How to Prepare for a Home Appraisal (and What You Need to Know)

Option 1: Negotiate a lower purchase price

One of the most common solutions to a low appraisal is for the seller to lower the purchase price. Since lenders typically base the loan amount on the appraised value rather than the contract price, reducing the sale price can help bridge the gap and allow the transaction to move forward without requiring the buyer to bring additional cash to closing. 

“When a home appraisal comes in below the agreed-upon purchase price, buyers and sellers still have several viable options,” recommends Christophe Choo, Beverly Hills and Los Angeles real estate advisor. “In my 37 years of real estate experience, I’ve successfully navigated this situation many times by negotiating a price reduction, arranging for the parties to split the difference, or pursuing a reconsideration of value supported by additional comparable sales. A low appraisal does not necessarily mean the transaction will fail; it simply requires a thoughtful strategy and experienced negotiation to reach a successful outcome.”

Option 2: Split the difference between the appraised value and purchase price

When neither the buyer nor the seller wants to absorb the full appraisal gap, splitting the difference can be an effective compromise. This approach allows both parties to share the financial burden, helping keep the transaction on track without requiring a significant concession from either side.

• For example, if a home is under contract for $500,000 but appraises for $480,000, the buyer and seller may agree to each cover $10,000 of the $20,000 gap. The seller lowers the purchase price, and the buyer brings additional cash to closing, creating a solution that works for both parties.

“A skilled listing agent should be ready to push back with hard data, including recent comparable sales, to formally dispute an appraisal that seems off,” shares Krissia Pena, general manager at Management One. “It also pays to build flexibility into your contract upfront: negotiation clauses that let buyer and seller work together on a solution, whether that’s splitting the difference, adjusting the price, or having the buyer cover part of the gap, can keep a deal from falling apart over a low valuation.”

Option 3: Cover the appraisal gap with cash

If the seller isn’t willing to lower the purchase price and the buyer is committed to moving forward, covering the appraisal gap with cash may be an option. This means the buyer pays the difference between the appraised value and the agreed-upon purchase price out of pocket, since lenders typically won’t finance more than the home’s appraised value.

“Start by carefully reviewing the appraisal report for factual errors or overlooked upgrades, then work with your agent to compile recent comparable sales that support a higher value,” suggests Beata Mandell, luxury real estate broker at Luxury Sky Realty. “From there, you can request a reconsideration of value through your lender, renegotiate the price with the other party, or cover the gap in cash if the deal warrants it.” 

• For example, if a home is under contract for $400,000 but appraises for $385,000, the buyer may need to bring an additional $15,000 to closing to complete the purchase at the original price. While this can increase upfront costs, some buyers choose this route when they’re purchasing a highly desirable property, competing in a hot market, or planning to stay in the home long-term.

Option 4: Challenge the appraisal

If you believe the appraisal is inaccurate, you may be able to challenge the appraisal through a process known as a Reconsideration of Value (ROV). This request is typically submitted through your lender, rather than directly to the appraiser. While appraisals are conducted by licensed professionals, they are still opinions of market value based on available data, which means mistakes can happen. Incorrect property details, overlooked upgrades, or the use of outdated or less relevant comparable sales can sometimes result in a valuation that doesn’t accurately reflect the home’s market value.

Before challenging an appraisal, carefully review the report and look for:

• Errors in square footage, bedroom count, or lot size.
• Missing renovations or upgrades that add value.
• Comparable sales that aren’t truly similar to the property.
• More recent or more relevant comparable sales that were not included.

“The best way to avoid a low appraisal is to prevent it from happening in the first place,” states Robert Freedman, broker and co-founder of DOMO Real Estate. “A knowledgeable real estate agent should be prepared in advance and raise any appropriate concerns through the proper channels. The agent should provide the appraiser with relevant comparable sales and important information about the property and neighborhood. The goal is to help the appraiser understand the local market and have access to the most accurate data available.”

Option 5: Obtain a second appraisal

In some situations, obtaining a second appraisal may be an option if you believe the original valuation doesn’t accurately reflect the home’s market value. In limited cases, a lender may order a new appraisal if there are documented deficiencies. Otherwise, a buyer may need to switch lenders and start a new loan application, which can add cost and delay. 

A second appraisal can be particularly helpful when:

• The property is unique and difficult to compare to nearby homes.
• The local market is changing rapidly.
• The original appraisal appears to contain errors.
• Better comparable sales become available after the first appraisal.
• The buyer and seller strongly believe the home’s value supports the contract price.

However, obtaining a second appraisal comes with additional costs and may delay the closing timeline. There’s also no guarantee that a new appraisal will come in higher, as the second appraiser may reach a similar conclusion based on the available market data.

>> See: Home Appraisal Tips for Sellers: What Hurts (and Helps) a Home Appraisal?

How buyers and sellers can reduce the risk of a low appraisal

While no one can guarantee a specific appraised value, there are steps buyers and sellers can take to reduce the likelihood of appraisal issues and improve the chances of a smooth transaction. Preparation, accurate market data, and working with experienced real estate professionals can make a significant difference.

Work with an experienced local real estate agent

Local market knowledge is one of the best defenses against appraisal challenges. An experienced real estate agent can help price a home appropriately, identify relevant comparable sales, and provide valuable market context that supports the contract price.

Provide the appraiser with relevant comparable sales

Comparable sales, often called “comps,” play a major role in determining a home’s appraised value. Agents can prepare a list of recent sales that closely match the property’s size, condition, features, and location to help ensure the appraiser has access to the most relevant market data available.

Document upgrades and unique features

If the home has undergone significant renovations or includes features that may not be immediately obvious, provide documentation whenever possible. 

Examples include:

• Kitchen or bathroom remodels.
• New roofing, HVAC systems, or windows.
• Energy-efficient upgrades.
• Smart home features.
• Custom finishes or premium materials.

Providing receipts, permits, or a list of improvements can help ensure valuable upgrades are considered during the appraisal process.

Build flexibility into the purchase agreement

Including appraisal-related negotiation clauses can help buyers and sellers prepare for unexpected valuation issues. These provisions may outline how the parties will handle an appraisal gap, whether through renegotiation, splitting the difference, or another agreed-upon solution.

Review the appraisal carefully

If an appraisal does come in lower than expected, don’t assume the value is final. Reviewing the report for factual errors, missing upgrades, or overlooked comparable sales may reveal opportunities to request a reconsideration of value through the lender.

While low appraisals can happen in any market, taking these proactive steps can help buyers and sellers minimize surprises, strengthen their position during negotiations, and increase the likelihood of a successful closing.

>> Discover: What Hurts a Home Appraisal? And 7 Things You Can Do to Fix Them

Can you still buy a house after a low appraisal?

A low appraisal can be frustrating, but it doesn’t necessarily mean your home purchase is over. Whether you negotiate a lower price, challenge the appraisal, secure alternative financing, or cover the difference in cash, there are often multiple paths to closing the deal. By understanding your options and working closely with experienced real estate professionals, you can move forward with confidence when an appraisal comes in below the purchase price.

FAQs about buying a house after a low appraisal

Can a seller refuse to lower the price after a low appraisal?

Yes, a seller can refuse to lower the purchase price after a low appraisal. While some sellers may agree to renegotiate to keep the transaction moving forward, others may believe the home is worth the agreed-upon price and choose to wait for another buyer. In this situation, buyers may need to cover the appraisal gap with cash, negotiate another solution, or walk away if their contract includes an appraisal or financing contingency.

Can a buyer back out because of a low appraisal?

In many cases, yes. If the purchase agreement includes an appraisal contingency or financing contingency, a buyer may be able to cancel the contract without penalty, depending on the contract terms and applicable state or local rules. 

How often are low appraisals successfully challenged?

While appraisals can be challenged, changes to the appraised value are relatively uncommon unless there are clear errors or important comparable sales were overlooked. Buyers and sellers can request a reconsideration of value by providing additional market data, but the outcome depends on the strength of the evidence and the lender’s review process.

Is it worth paying above an appraised value?

It depends on your financial situation, long-term goals, and the local market. In competitive markets, buyers sometimes choose to pay above the appraised value if they believe the home is a good investment and they have the funds to cover the difference. Before doing so, it’s important to consider how long you plan to stay in the home, your available cash reserves, and whether the purchase still fits comfortably within your budget.

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