If the appraisal comes in low, you have several options: provide comparable sales to challenge the appraisal, renegotiate the price with the buyer, have the buyer pay the gap in cash, meet in the middle, or cancel the contract if the buyer has an appraisal contingency. In Texas, most contracts include an appraisal contingency that allows the buyer to walk away if the property does not appraise.
Your Options When the Appraisal Is Low
Option 1: Challenge the appraisal by providing your agent's comparable market analysis showing similar recent sales at or above your contract price. The lender can request a reconsideration of value (ROV). Option 2: Renegotiate the price with the buyer. Option 3: The buyer can pay the difference in cash if they have the funds. Option 4: Meet in the middle by splitting the gap. Option 5: If you cannot agree, the contract may be terminated under the appraisal contingency.
Using Comps to Challenge a Low Appraisal
Your real estate agent can prepare a formal reconsideration of value request. This includes comparable sales that the appraiser may have missed, recent pending sales, and adjustments for upgrades, condition, and location. The ROV must be submitted to the lender, who decides whether to ask the appraiser to reconsider. The success rate varies, but it is worth trying if you have strong comps.
Negotiating the Appraisal Gap With the Buyer
If the appraisal gap is small ($5,000-$10,000), many buyers will split the difference or pay the full gap if they really want the home. If the gap is large, you may need to lower the price to keep the deal together. In hot markets with multiple offers, some buyers waive the appraisal contingency entirely, but this is risky for the buyer.