How do I negotiate when the appraisal comes in low?

A low appraisal creates a gap between the appraised value and your offer price. The lender will only lend based on the appraised value, so you need to make up the difference. Your first step is to negotiate with the seller. Present the appraisal and ask them to reduce the price to the appraised value. Many sellers will agree, especially if they need to sell. If the seller refuses, you can cover the gap yourself. This means bringing additional cash to closing. You can also split the difference, where each party contributes half of the gap. If the appraisal contains errors, like incorrect square footage or missing comps, your agent can request a reconsideration of value from the appraiser. This does not always work, but it is worth trying if the appraisal is clearly wrong. If none of these options work and you have an appraisal contingency, you can walk away and get your earnest money back. The decision depends on how much you want the home and whether bringing extra cash to closing is feasible.