The Home Appraisal, Explained

The one thing every buyer should understand before the report comes back: your loan is based on the lower of price or appraised value — so a low appraisal is a cash problem, not a loan denial. Say you agree to buy at $700,000 and the appraisal comes in at $680,000. The lender will lend against $680,000, which means the $20,000 gap has to be resolved somehow — but it does not mean your loan is dead. You have four real moves: renegotiate the price down toward value (very common — the seller knows the next buyer's appraisal will likely land the same place), bring extra cash to cover the gap if you have it and love the home, dispute the appraisal with stronger comparable sales, or walk away and recover your earnest money if you kept an appraisal contingency. Knowing this in advance turns a scary phone call into a calm decision. The moment a value question arises, we walk you through which move fits your numbers. Get financing that's ready →