What Happens If Your Home Appraises Low? Does a Low Appraisal Kill the Deal? | Home Selling Tips

What Happens If Your Home Appraises Low? Does a Low Appraisal Kill the Deal? | Home Selling Tips

When you’re selling a home, one of the most stressful moments can be the appraisal—especially if the buyer’s offer comes in high. Many sellers wonder: “What if my home appraises lower than the buyer’s offer? Does that kill the deal?”

The good news is: a low appraisal does NOT automatically kill a real estate deal, especially in competitive markets like Southern California. Let’s break down what a low appraisal really means, why it happens, and what options sellers have to keep the sale moving forward.

Why Do Low Appraisals Happen?

Even in hot real estate markets, it’s not uncommon for homes to appraise below the agreed purchase price. Appraisers base their valuations on recent comparable sales, property condition, location, and market trends. If home prices in your area are rising faster than recent sales reflect, the appraisal may come in lower than expected.

This gap between the offer price and the appraised value is often called an “appraisal shortfall.”

Does a Low Appraisal Kill the Deal?

Not necessarily. A low appraisal only kills the deal if both parties can’t come to an agreement about what to do next.

But in most cases, sellers and buyers work together to move forward.

Here are the most common outcomes when a home appraises below the buyer’s offer:

1. The Buyer Pays the Difference Out of Pocket

In competitive markets, many buyers are willing to cover the appraisal gap themselves.

This happens when buyers feel strongly that the home is worth more than the appraised value—or when they don’t want to risk losing the property to another buyer.

Some purchase agreements even include an appraisal gap clause, where the buyer agrees in advance to pay up to a certain amount above the appraised value.

2. The Seller Agrees to Lower the Price

If the buyer can’t cover the difference, one option is for the seller to reduce the price to match the appraised value.

While this may not feel ideal, it can keep the deal together and prevent the home from going back on the market.

3. The Buyer and Seller Split the Difference

This is one of the most common solutions.

For example, if the appraisal comes in $20,000 low, the buyer might pay $10,000 and the seller might reduce the price by $10,000.

This compromise often satisfies the lender and keeps both parties happy.

4. The Buyer Requests a Reconsideration of Value

If the appraisal seems inaccurate or outdated comps were used, the buyer’s lender can submit a Reconsideration of Value.

This allows the appraiser to review new comparable sales or important property details that may have been missed the first time.

5. The Buyer Switches Lenders or Gets a Second Appraisal

While less common, some buyers choose to get a second appraisal if their loan type allows it.

Different lenders sometimes produce different appraisal results.

6. The Deal Cancels (Worst-Case Scenario)

A deal only falls apart if neither party can agree on how to handle the appraisal gap.

But with today’s competitive buyer demand, cancellations are far less common than they used to be.

Final Thoughts

A low appraisal doesn’t mean your deal is dead. It simply means you and the buyer need to agree on how to bridge the gap.

With the right negotiation strategy—and a strong real estate agent guiding you—you can still close successfully, even with a low appraisal.

If you’re thinking about selling your home and want expert guidance on pricing, appraisals, and navigating today’s market, let’s talk. I’ll help you get the best return possible and move forward with confidence.