Step 32 of 48 Phase 4: Make an Offer & Negotiate
4.9 Confirm Home Appraisal
The appraisal protects you and your lender by confirming the home is worth what you are paying. If the appraisal comes in low, you have options to renegotiate or walk away.
What Appraisers Do
- Physically inspect the property interior and exterior
- Measure the home and note its condition
- Research recent comparable sales in the area
- Analyze market trends and adjustments
- Provide an objective opinion of market value
Appraisal Outcomes and Options
| Outcome | Meaning | Your Options |
|---|---|---|
| At or above price | Home worth what you offered | Proceed as planned |
| Below price | Home worth less than offered | Renegotiate, pay difference, or walk away |
| Subject to repairs | Issues must be fixed first | Seller repairs or you negotiate |
| Incomplete | More info needed | Provide info and wait for update |
Pro Tips
- You can provide the appraiser with comparable sales data
- Be present (or have your agent present) to answer questions
- A low appraisal can be a negotiating tool with the seller
- You can request a reconsideration of value with new data
- Consider getting a second appraisal if you disagree
What to Do If Appraisal Is Low
- Renegotiate the purchase price with the seller
- Pay the difference between appraisal and price in cash
- Split the difference with the seller
- Walk away using your appraisal contingency
Real-World Example
Tom and Aisha's Story: Tom and Aisha had an accepted offer at $395,000, but the appraisal came back at $375,000 - a $20,000 gap. Here is how they handled it.
- Their lender would only finance based on the appraised value of $375,000
- Option 1: Pay the $20,000 difference in cash (they did not have it)
- Option 2: Ask the seller to lower the price to $375,000
- Option 3: Meet in the middle at $385,000 and pay $10,000 extra cash
- Option 4: Walk away using their appraisal contingency
- They presented Option 3 to the seller with supporting comparable sales data
Outcome: The seller agreed to lower the price to $383,000, and Tom and Aisha brought $8,000 extra to closing. The appraisal contingency gave them leverage to renegotiate rather than overpaying for the home.