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home appraisal is low

If your home appraisal is low, you may have a hard time closing on your home. What’s more frustrating, by the time the appraisal comes back, you’re likely close to closing. No one wants a low appraisal to derail or even destroy the deal. If your home appraisal is low, there are a few options that can help you.

What is an Appraisal?

First things first—what is an appraisal, anyway? This unbiased report estimates the fair market value of a home. Appraisers find this number by comparing your home to similar, recently-sold homes in your area and then making adjustments for feature differences.

An appraisal is key because it’s how the mortgage lender makes sure that the house you’re buying covers the amount of your new mortgage. An appraisal actually protects the buyer from paying more than the home is worth.

Why Your Home Appraisal is Low

As you probably know, Portland’s market is pretty competitive right now, resulting in steadily rising prices. If your home appraisal is low, it’s probably because of one of these reasons:

  • There were multiple offers on the home, which drove the price up too high
  • Home prices are rising very quickly because of limited inventory
  • The home was incorrectly appraised

What to Do if a Home Appraisal is Low

Though it’s certainly not an ideal situation for either the buyer or the seller, there are a few options if a home appraisal is low.

Reduce the Price of the Home

The fastest way to fix the situation is for the seller to reduce the price of the home to the appraised value. But this understandably may not be very palatable to the seller.

Make Up the Difference

In most cases, the lender will allow the buyer to make up the difference between the appraisal value and the selling price in cash. This is also a quick solution, but it may be hard for the buyer to come up with that much additional cash.


Another option is a compromise between the buyer and seller, where the seller drops the price part of the way and the buyer makes up the rest of the difference in cash.

Challenge the Appraisal

You can challenge the appraisal (the buying and selling agents can help find comparable sales data to justify the price), but it’s usually a long shot. The appraiser’s client is the lender, and they’re the only ones who can order either a new appraisal or a review of the existing one. If the lender doesn’t have good reason for doubting the appraisal, it won’t happen.

Get a Second Opinion

You can get a second opinion by ordering your own appraisal. The lender will likely average the two if they are different. Again, this is a rather long shot (there’s no guarantee that the second appraisal will be different) and you may be out the appraisal fee (between $750 and $1800). Sometimes it’s easier for the seller to agree to start over with another lender.

The good news is that here at Farrell, we rarely have low appraisals. We always give the appraiser comparable properties to support the sales price. We’re also happy to meet with the appraiser to answer any questions. We know that it’s in everyone’s best interest for the appraisal to be at the right price, so we provide that information whether we represent the buyer or the seller.

Walk Away

As unappealing as it is for both the buyer and seller, a low appraisal may mean that the transaction falls apart. If the appraisal is too low, most purchase contracts allow for the buyer to back out and receive their earnest money back by a certain date.

Let Us Help

If you have any questions about the buying or selling process, give us a call! We’re here to help however we can.

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