What Is a Home Appraisal — And What Happens When It Comes In Low?
The home appraisal is an independent assessment of a property's market value, conducted by a licensed appraiser, ordered by and for your mortgage lender. Your lender will not lend more than the appraised value, meaning the appraisal directly affects how much you can borrow and whether the transaction can proceed at the agreed-upon price.
How the Appraisal Works
An appraiser visits the property, measures and documents its characteristics, and then selects comparable sold homes (comps) that have sold recently in the same market. By adjusting for differences between the subject property and the comps, the appraiser arrives at an estimated market value. The entire process typically takes one to two weeks once ordered.
In fast-moving markets like Chester County, where more than half of sales in some months close above asking price there is an inherent risk that the appraiser's comp-based value lags the most current market momentum. This is one of the most common causes of low appraisals.
Request a Reconsideration of Value (ROV):
If you believe the appraisal is flawed, with incorrect square footage, poor comp selection, or failure to account for significant upgrades, your lender can submit an ROV with documented evidence. This process is not guaranteed to succeed but is worth pursuing if you have strong evidence.
Seek a second appraisal:
With lender cooperation, a second appraisal can be ordered. Again, no guarantee of a different result.
Walk away:
If you have an appraisal contingency in your contract and cannot reach agreement with the seller, you can terminate the contract within the contingency window and recover your earnest money deposit.
What Happens When the Appraisal Comes In Low
If the appraisal is below your contract price, you have several options:
Pay the gap:
If you have the cash and still feel the home is worth the price you agreed to pay, you can bring additional cash to closing to bridge the gap between the appraised value (what the lender will fund) and the purchase price.
Renegotiate with the seller:
Request that the seller reduce the price to the appraised value. This is more likely to succeed if the seller is motivated to close quickly, if the market has softened since the initial offer, or if the appraisal contains incontrovertible market evidence.
Split the difference:
A common middle-ground approach buyer and seller each absorb part of the gap. For example, if the gap is $20,000, the seller drops $10,000 and the buyer covers $10,000 in additional cash.
Contact Us
Our Location
403 W Lincoln Highway, Suite 106, Exton, PA 19341