Appraisal Gap Scenario Planner

The appraisal came in low. Now what?

$
$
$
$
%
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% of price

Appraisal gap

$20,000

Real decision. Weigh emotional cost of losing the house vs. buying $X over value.

Appraisal gap

$20,000

shortfall vs contract

Severity

Medium

real decision

Gap as % of price

4.0%

of contract price

Your cash buffer

$25,000

covers

Your options

1Request ROV (Reconsideration of Value)

Submit comparable sales the appraiser may have missed and ask the same appraiser to reconsider. Free, fast, and now formally required as a borrower right under FHFA's 2024 ROV rule for Fannie/Freddie loans.

Cash needed: $100,000Loan: $400,000LTV: 80.0%P&I: $2,528/mo

Always do this first — it's the cheapest move. Materially-different value rare but possible if the original appraiser missed strong comps. Lender / AMC must respond within ~30 days.

2Cover the gap with cash

You bring extra cash to closing to cover the difference between contract price and appraised value.

Cash needed: $120,000Loan: $380,000LTV: 79.2%P&I: $2,402/mo

Get the house. Your loan is $380,000 (LTV 79.2% on appraised value).

3Renegotiate to appraised value

Ask the seller to lower the contract price to the appraisal. Most likely to work in a buyer's market or with motivated sellers.

Cash needed: $100,000Loan: $380,000LTV: 79.2%P&I: $2,402/mo

Save $20,000 on price. No extra cash needed. Seller may say no.

4Meet in the middle

Negotiate seller to come down half the gap, you cover the rest with cash.

Cash needed: $110,000Loan: $380,000LTV: 79.2%P&I: $2,402/mo

Pay $10,000 extra cash. Seller takes $10,000 less.

5Request second appraisal

Pay for a new appraisal (~$500-800) hoping for a higher value. Works if comps are arguable.

Cash needed: $100,600Loan: $400,000LTV: 80.0%P&I: $2,528/mo

Long shot. Most appraisers come in similar. ~25% of disputes get a meaningful change.

6Walk away

Use the appraisal contingency to back out cleanly. Recover earnest money.

No deal — keep shopping

Lenders use the lower of contract price or appraised value to size the loan. That’s why all "buy at contract" options leave you with the same loan amount — you’re paying the gap with cash, not borrowing more.