Short Answer
If the home appraises for less than your offer price, you have several options: negotiate the price down with the seller, pay the difference in cash, challenge the appraisal if there are errors, or walk away if your contract has an appraisal contingency. An appraisal gap can delay or derail a transaction, but it does not have to end it.
The appraisal protects the lender by ensuring the home is worth the loan amount. If the appraisal comes in low, the lender will only lend based on the appraised value, not your offer price. You then have options. You can ask the seller to reduce the price to the appraised value. You can pay the difference between the appraised value and the offer price out of pocket. You can split the difference with the seller. You can dispute the appraisal if you believe it is inaccurate (this rarely changes the outcome). Or you can exercise your appraisal contingency and walk away with your earnest money. In a competitive market, some buyers include an appraisal gap guarantee in their offer, agreeing to cover a shortfall up to a certain amount. This can make your offer more attractive, but it carries financial risk.
Bob's Advice
Redfin Senior Agent · AI Certified Agent
An appraisal gap is stressful, but it is not the end of the world. I have successfully negotiated price reductions on low appraisals, and I have helped buyers bring cash to close the gap. The key is having a contract with the right contingencies and understanding your options before you make an offer. If appraisal risk worries you, let us talk through strategies to protect yourself before you go under contract.
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