What happens when the appraisal comes in low

What does a low appraisal mean?

A low appraisal means the appraiser's opinion of market value came in below the contract price on a purchase, or below the figure you hoped for on a refinance. It does not, by itself, mean the report is wrong. It means the sales the appraiser found, after adjustment, did not support a higher number as of the effective date.

The gap matters because the loan is tied to the value. That is why a low figure can change the cash needed at closing or the size of a refinance.

Can you see the report before deciding anything?

Yes, for most home loans. The CFPB explains that for a loan secured by a first lien on a dwelling, the lender must give you a free copy of appraisals developed for your application, promptly once complete or three business days before closing, whichever is earlier. If you have not received yours, ask the lender for it.

Once you have it, read it in order. The section by section walkthrough on this site covers each part of the form.

What should you look for first?

Plain factual errors about your home are the first thing to look for. A wrong bedroom count, a missing bathroom, short square footage, or finished space labeled as unfinished can all move the value. These are the easiest problems to correct because records such as permits, plans or a survey can show the right answer.

Then look at the sales. Were there closed sales nearby, similar in size and condition, that the report did not use? Were the sales older when newer ones existed? Write down what you find with addresses and sale dates. The guide to reading the comparables grid shows where each detail lives.

What options usually exist after a low appraisal?

The options usually fall into a few groups, and which ones apply depends on your contract and your loan. On a purchase, buyer and seller can renegotiate the price, share the gap, or the buyer can bring more cash to closing. Some purchase contracts include an appraisal contingency that covers this situation; how yours works is a question for your agent or attorney.

On a refinance, the choices look different, such as changing the loan amount or the loan program. In either case, you can also ask the lender to send the report back to the appraiser for a reconsideration of value.

When is a reconsideration worth raising?

A reconsideration is most useful when you have specific facts the appraiser did not weigh. Under Fannie Mae requirements the borrower gets one borrower initiated request per appraisal, so it helps to gather everything first rather than sending it in pieces. The steps are laid out in how to request a reconsideration of value.

If you believe the value reflects bias, that can be raised through the same process. When FHFA announced the updated policies in May 2024, it noted that lenders must refer appraisers to the proper agencies for violations of laws against discrimination.