What to Do When Your Home Appraisal Is Lower Than the Sale Price: 5 Simple Steps

If your home appraisal comes in lower than the sale price, it can feel like a major roadblock. But don’t panic — it doesn’t automatically mean your deal is dead. Buyers face this more often than you’d think, and there are practical steps you can take to keep things moving.

A low appraisal matters because it can affect how much you’re able to borrow, how much cash you’ll need at closing, and whether the seller is willing to negotiate. The good news: you still have options.

Why Does a Home Appraisal Come in Low? 

A home appraisal is an independent opinion of a property’s value, based on comparable sales, market conditions, and the home’s features. Sometimes, the appraised value comes in below the agreed-upon purchase price.

This can happen for a few reasons:

• The buyer offered above asking to beat other offers.

• There aren’t enough recent comparable sales nearby.

• Market shifts, like declining home prices, affect values.

• The home has unique features that don’t show up in comps.

Pro Tip: If you’re in a hot market and plan to offer over asking, ask your real estate agent what the appraisal “risk” looks like before submitting your offer.

The appraisal sets the lender’s maximum loan amount. That’s why it matters. But a low appraisal doesn’t have to derail your purchase.

Step 1: Request a Reconsideration of Value (ROV) 

The first step is to ask for a Reconsideration of Value. This means challenging the appraiser’s report by submitting stronger comparable sales. Your real estate agent usually takes the lead here.

Sometimes, the appraiser agrees and raises the value. Other times, they don’t. Either way, it’s worth trying before moving to negotiations.

Example: A buyer in Charlotte recently faced a $15,000 gap between the appraisal and purchase price. Their agent found two updated sales in the same neighborhood that weren’t included in the original report. After review, the appraiser raised the value by $10,000 — closing the gap enough to move forward.

Step 2: Talk to the Seller 

If the ROV doesn’t change the value, the next step is to negotiate with the seller. Options include:

• Asking the seller to reduce the price to match the appraised value.

• Meeting in the middle — for example, the seller lowers the price by $5,000 and you increase your down payment by $5,000.

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Scenario: A seller listed their home for $400,000, and the buyer’s appraisal came back at $390,000. The seller didn’t want to drop the full $10,000, but they agreed to reduce by $5,000. The buyer covered the other $5,000 out of pocket, and the deal closed smoothly.

Many sellers will negotiate if they want the sale to close, especially if they know the next buyer’s appraisal could come in low as well.

Step 3: Adjust the Loan Amount 

Conventional loans are always based on the lower of the purchase price or the appraised value. That means your loan amount will shrink if the appraisal comes in low.

Example: You’re buying a home for $100,000 with 10% down. If the appraisal is $95,000, the lender bases the loan on $95,000. Your down payment is recalculated. As long as you still meet the minimum down payment requirements, you can move forward without major changes to your terms.

Pro Tip: Ask your lender to walk you through the math. Sometimes the adjustment isn’t as drastic as it sounds once the percentages are recalculated.

Step 4: Consider a One-Time Mortgage Insurance Premium 

If the lower value pushes your loan-to-value ratio above 80%, mortgage insurance (MI) may be required. If you hoped to avoid monthly MI, you can pay a one-time premium at closing instead.

This option has saved the day for some of my buyers because it keeps their monthly payments lower while still moving the purchase forward.

Step 5: Stay Flexible and Explore Your Options 

A low appraisal isn’t ideal, but it doesn’t have to end your homebuying journey. Between negotiating with the seller, adjusting your loan, or using a one-time MI premium, there are several paths forward.

The most important part is staying flexible and talking openly with your lender, your real estate agent, and the seller.

Pro Tip: Buyers who communicate early and often tend to have smoother closings. Don’t wait until the last minute to explore your options.

You’ve got options — don’t let a low appraisal scare you off from a home you love.

FAQ: Low Appraisal Questions 

Q: What if the seller doesn’t lower the price?  A: You can negotiate other terms, such as splitting the difference or increasing your down payment. If the seller won’t budge, ask your lender about adjusting your financing.

Q: Can a low appraisal kill the deal?  A: Not necessarily. There are ways to work through it, like renegotiating the price, adjusting the loan, or paying a one-time MI premium. 

Q: How do I know if I need mortgage insurance?  A: You’ll need MI if your down payment is less than 20%. If the appraisal pushes your loan-to-value ratio over 80%, MI might be required. 

Q: What’s the difference between an ROV and a regular appraisal?  A: A regular appraisal is the initial value assessment. An ROV is a request to reconsider that value using updated or stronger comparable sales.

Author Bio:  Rebecca Richardson, “The Mortgage Mentor,” is a nationally ranked mortgage expert with over 20 years of experience helping clients navigate home financing with clarity and confidence. Known for her innovative, client-first approach, Rebecca specializes in custom mortgage solutions for veterans, investors, and buyers facing major life transitions. As a top-producing loan officer and sought-after educator, she’s a trusted voice in the mortgage industry and a go-to resource for mortgage advice nationwide.