Appraisal Gap Scenario Planner
The appraisal came in low. Now what?
Appraisal gap
$20,000
Real decision. Weigh losing the house against paying $20,000 over appraised value.
Appraisal gap
$20,000
shortfall vs contract
Severity
Medium
real decision
Gap as % of price
4.0%
of contract price
Your cash buffer
$25,000
covers
Your options
Submit comparable sales the appraiser may have missed and ask, through your lender, for the appraiser to reconsider. It's free. Since late 2024, Fannie Mae and Freddie Mac (at FHFA's direction) require lenders to offer a borrower-initiated ROV, generally one request per appraisal; FHA and VA have similar processes.
Do this first; it costs nothing. A materially different value is rare but possible if the original appraiser missed strong comps. Ask your lender how long its review takes so you can extend the contract dates if needed.
You bring extra cash to closing to cover the difference between contract price and appraised value.
Get the house. Your loan is $380,000 (LTV 79.2% on appraised value).
Ask the seller to lower the contract price to the appraisal. Most likely to work in a buyer's market or with motivated sellers.
Save $20,000 on price. No extra cash needed. Seller may say no.
Negotiate seller to come down half the gap, you cover the rest with cash.
Pay $10,000 extra cash. Seller takes $10,000 less.
Your current lender generally won't order a second appraisal just because the value came in low (only if the first is deficient). Moving to a new lender means paying for a new appraisal (~$500-800). FHA and VA appraisals stay with the property for months, so this mainly helps on conventional loans.
Long shot and slow. A new appraiser often lands near the first value, and restarting the loan can push past your closing date and rate lock.
Use the appraisal contingency to back out cleanly and get your earnest money back.
No deal. Keep shopping