What happens if the buyer's appraisal comes in low?
The purchase contract and the buyer's loan decide, because no Virginia statute sets a remedy for a low appraisal. The paths that follow are a renegotiated price, the buyer covering the difference in cash, a request that the lender reconsider the value, or cancellation on the contract's own terms. On FHA and VA loans a model amendatory clause may apply, and the buyer's lender says whether it does.
The appraised value lands under the price, and the purchase contract is the first thing anyone reads
The news comes through the buyer's side, because the appraisal was ordered for the buyer's loan: the lender's appraiser put the property below the price both parties signed. Nothing in the Virginia Code tells the seller or the buyer what happens next. The answer sits in the purchase contract, and in the loan the buyer is using to close.
That is why the first document on the table is the contract itself, not a rule book. Some contracts make the sale depend on the property appraising at or above a stated figure. Some make it depend on the buyer's financing, which can turn on the appraisal without naming it. Some say nothing about value at all. Each version is a contingency of a different shape, and how a condition like that works in general is set out under contingency in a purchase contract.
The distance between the contract price and the appraised value has a working name, the appraisal gap. No Virginia or federal rule defines it. The term and where it comes from are on the page for appraisal gap; what matters here is what the parties do about one.
The number belongs to the buyer's loan, and the buyer is the one entitled to a copy
A seller reading the situation from the outside is looking at a document that was not ordered for the sale. It was ordered for the loan.
The CFPB says that when you borrow to buy a home the lender may need a new appraisal and may require you to pay for it. The same agency says lenders are not allowed to interfere with the appraiser's judgment. So the figure is not something the seller, the buyer or either agent can simply correct by phone.
Federal rules speak to who sees it. Under 12 CFR 1002.14, a creditor must give the applicant a copy of all appraisals and other written valuations developed in connection with an application for credit to be secured by a first lien on a dwelling. That right runs to the applicant, which on a purchase loan means the buyer. On closed-end credit the copy is due promptly upon completion or three business days before consummation, whichever is earlier, unless the applicant waives that timing and agrees to receive it at or before consummation. The creditor may not charge for the copy, but unless otherwise provided by law it may require a reasonable fee to reimburse the cost of the appraisal itself. Who may perform an appraisal in Virginia, and what the word covers, is set out under the glossary entry for appraisal.
Whether a loan on bare ground needs an appraisal at all, and which loans a lender will make on land, is its own question, answered under whether you can buy land with a regular mortgage. And a listing agent's own number cannot stand in for the lender's appraisal. Va. Code 54.1-2010 A 1 says a licensee's valuation, made in the ordinary course of business for a fee, shall not be used in lieu of an appraisal performed by a licensed appraiser, which is worked through in why a licensee's valuation is not an appraisal.
Four ways the sale can go from here, and who holds the decision on each
Read from the seller's side, a low appraisal opens a short list of paths. Several can run at once: a buyer can ask the lender to take another look while the parties talk price.
| Path | What it involves | Who decides |
|---|---|---|
| Renegotiate the price | The buyer uses the lower appraised value to ask for a reduction; the seller accepts, counters or declines | Seller and buyer, in writing, under the contract |
| The buyer covers the difference | The buyer brings cash to close the distance between the appraised value and the price, in whole or in part | The buyer, and any gap promise already in the contract |
| Ask the lender to reconsider | The borrower points the lender to errors, omissions or weak comparable sales in the report | The buyer's lender |
| End the contract | Cancellation on whatever terms the contract sets, including what happens to the deposit | The contract, read by each party's attorney |
The CFPB says a buyer can often use a lower appraised value to negotiate a reduction in the sales price. For a seller, that request can come back as a written counteroffer at the lower figure. Under 18VAC135-20-300, a licensee who fails to tender promptly to the client or unrepresented party every written offer, every written counteroffer and every written rejection commits a misrepresentation or omission, so a written counteroffer goes to the seller promptly.
Some offers promise the cash path up front. Colorado's Division of Real Estate describes buyers promising in the offer to cover part or all of an appraisal gap in cash. That is a description of one state's market, not a Virginia rule, and whether a promise in a given contract binds a given buyer is the contract and the attorney's call.
A request for a second look, and a model clause written for FHA and VA financing
Two of the paths run through the loan rather than the contract, and both belong to the buyer's lender to apply.
The first is a reconsideration of value. The CFPB has written that homebuyers can ask a lender to reconsider a valuation they believe is inaccurate, pointing out factual errors or omissions or inadequate comparable properties. That post now sits in the agency's archive, marked as content that may be outdated, so it describes a process rather than stating a current binding rule. How a particular lender takes such a request is the lender's to explain.
The second is HUD's model amendatory clause, dated March 2023. It says the purchaser is not obligated to complete the purchase or forfeit earnest money deposits unless given, under HUD/FHA or VA requirements, a written statement of an appraised value of not less than the figure the clause states. It also leaves the buyer free to go ahead anyway:
The purchaser shall have the privilege and option of proceeding with consummation of the contract without regard to the amount of the appraised valuation.
HUD model Amendatory Clause, March 2023
The clause explains that the appraised valuation is arrived at to determine the maximum mortgage HUD will insure, and it adds a line worth reading twice:
HUD does not warrant the value or condition of the property.
HUD model Amendatory Clause, March 2023
The HUD model document does not say which loans must carry the clause. Whether it belongs in a particular contract, and whether it applies to a particular loan, is a question for the buyer's lender.
When the sale ends over value, the deposit follows the contract
Cancellation is the heaviest of the paths, and the one a web page can settle least. The contract sets whether the buyer may walk away, by when, with what notice, and at what cost.
The money on deposit is usually the sharpest part of that question. How a deposit is held, and when it is refunded or kept, is covered under what earnest money is on a land contract. On land, where the buyer's diligence can run on several fronts at once, the appraisal is one condition among several, and the order in which deposits and contingencies play out is laid out in the Land 101 guide to earnest money and contingencies.
None of this makes a low appraisal the end of a sale by default. What decides between the paths is paper the parties already signed, which is why the first read on the day the number comes back is the contract, and the second is the attorney's.
Selling, and the buyer's appraisal came in under the contract price?
Send the property and where the contract stands. Lowell can walk through the paths a seller has from here, while the reading of the contract stays with your attorney. No cost, no obligation.
Got it. Thank you.
We'll be in touch shortly with an honest read.
Questions this raises
Can the lender push the appraiser to bring the value up to the contract price?
Not by leaning on the appraiser. The Consumer Financial Protection Bureau says appraisers have to follow rules in arriving at a property's value, and lenders are not allowed to interfere with the appraiser's judgment. What a borrower can do is ask the lender to reconsider a valuation believed to be inaccurate, a process the CFPB described in a post it has since archived as possibly outdated.
What can a buyer point to when asking the lender to reconsider the value?
In that archived post, which the CFPB marks as possibly outdated, the agency said borrowers can point out factual or other errors or omissions in the appraisal, or inadequate comparable properties. The post describes a request to the lender, not a binding outcome, and how a particular lender handles one is the lender's to explain.
Where this page's facts come from
Every rule, office and figure above traces to one of these. Rules change; check the office before you act on one.
- My appraisal is less than the sale price. What does that mean for me? Consumer Financial Protection Bureau
- What are appraisals and why do I need to look at them? Consumer Financial Protection Bureau
- Mortgage borrowers can challenge inaccurate appraisals through the reconsideration of value process Consumer Financial Protection Bureau (archived)
- Amendatory Clause model document (March 2023) U.S. Department of Housing and Urban Development
- 12 CFR 1002.14, rules on providing appraisals and other valuations Consumer Financial Protection Bureau (eCFR)
- What is an appraisal gap on a home purchase? Colorado Division of Real Estate
- 18VAC135-20-300, misrepresentation and omission (Real Estate Board regulations, full chapter) Virginia Real Estate Board
- Va. Code 54.1-2010, exemptions from the appraiser chapter Virginia General Assembly