What Happens When the Appraisal Comes In Low

Your lender's appraisal came back below your purchase price. Before you panic, understand what it means: the lender will only finance a percentage of the appraised value, not the contract price. If you agreed to pay $400,000 and the house appraises at $380,000, the lender sees $380,000. The $20,000 gap is now your problem to solve , one way or another.

This happens more often than most buyers realize, especially in markets where prices have moved faster than recent comparable sales can keep up. The good news: you have four real options, and at least one of them is probably going to work for you.

Option 1: Renegotiate the Price

The cleanest fix is asking the seller to lower the price to the appraised value. If the comps genuinely don't support the higher number, a reasonable seller will often agree, their next buyer is going to hit the same appraisal. Your attorney drafts a price-reduction amendment. The lender re-runs the numbers. You close on schedule.

In a hot market, a seller may refuse and dare you to walk. Whether that's a bluff depends on how much inventory there is and how motivated they are.