What to Do When the Appraisal Comes in Low

The lender’s appraisal arrives below your agreed purchase price. Before offering to cover the difference, get three things in front of you: the report, a revised financing calculation, and your contract deadlines.

Those documents answer different questions. The report explains the valuation. The lender determines what financing remains available. Your contract controls the options and obligations that need legal review. Working through all three helps you avoid making an expensive decision based only on the size of the appraisal gap.

Ask your lender for a copy of the appraisal if you have not received it. The CFPB identifies obtaining the report as the first step after a low valuation. It also recommends considering price negotiations and discussing cancellation consequences with an attorney. CFPB low appraisal guidance

In a New York purchase, send the report to your attorney and ask which financing, appraisal, notice, or closing provisions require attention. Do this while the lender reviews the numbers. For planning purposes, keep separate lines for the lender’s review estimate and each contractual deadline. Ask your attorney whether any extension must be obtained rather than assuming an ongoing review pauses the contract.

The difference between price and appraised value is not automatically the amount of extra cash you need. Ask the lender for the revised loan amount, required buyer contribution, pricing, mortgage insurance if applicable, and total estimated closing funds.

Here is a hypothetical illustration. Assume a purchase price of $800,000 and an intended $640,000 loan. The buyer planned to contribute $160,000 toward the price. Now assume the appraisal is $780,000 and this particular loan is limited to 80% of that value:

• Revised loan: $624,000
• Buyer contribution toward the unchanged price: $176,000
• Increase over the original contribution: $16,000

The valuation gap is $20,000, but the additional contribution in this example is $16,000. This excludes closing costs and other adjustments. It is arithmetic under stated assumptions, not a promise about a lender’s terms. A different loan structure produces a different result.

Keep the purchase deposit in the reconciliation. It is part of funds already contributed, not a new source of money to count twice. Review the full budget in cash needed to buy a home.

If you identify a factual problem or believe relevant information was missed, ask the lender about its reconsideration-of-value process. Prepare a short, specific explanation with supporting records. Examples of questions to investigate include whether the property description is accurate and whether proposed comparable sales genuinely resemble the subject property.

For loans subject to Fannie Mae requirements, its guide provides a borrower-initiated review process for unsupported, deficient, or potentially discriminatory appraisals. Supporting information and an explanation are required; the process does not promise a higher value. These requirements apply to the covered lending framework, not every loan. Fannie Mae Appraisal Quality Matters

Use the lender’s submission channel. Ask what evidence it needs and when a response may be available. Organize the request around accuracy rather than the number needed to make the purchase work.

Ask your agent to discuss a price reduction with the seller if you want to pursue one. The seller may decline or propose a different arrangement. Ask the lender to assess any revised financing before accepting it, and ask your attorney to document an agreed contract change.

If you consider contributing more cash, write down what remains afterward. Would the purchase leave room for foreseeable repairs and household needs? Decide your limit before negotiations become urgent.

Can I cancel and get my deposit back? A low appraisal alone does not guarantee either result. Your contract terms, any protections you waived, and required notices matter. Have your attorney assess the specific facts before you terminate or miss a deadline. CFPB explanation of cancellation consequences

Can I simply order another appraisal? Ask the lender first. Under Fannie Mae’s process, the lender is responsible for deciding whether to accept the appraisal conclusions; a borrower cannot guarantee a new report or higher result. Fannie Mae reconsideration FAQs

When the numbers are settled, revisit closing wire fraud precautions. For help organizing the property information and negotiation questions, consult a B Square Realty agent alongside your lender and attorney.