What Happens if a Home Appraises Below the Purchase Price?

A low appraisal can catch buyers and sellers off guard, but it does not have to derail a transaction. If a home appraises for less than the agreed purchase price, the lender will typically base the loan amount on the appraised value rather than the contract price, which can create a gap between what the lender is willing to finance and what the buyer agreed to pay.

In many cases, buyers and sellers return to the negotiating table. A seller may reduce the price, a buyer may contribute additional cash to cover the difference, or both parties may find a middle ground. Sometimes an appraisal review or a second appraisal may be appropriate if there are concerns there.

As conditions continue to vary across regions in 2026, understanding local pricing trends is especially important. Staying informed about recent comparable sales can help buyers make competitive, informed offers.

If you’re preparing to buy or sell, call your Berkshire Hathaway HomeServices network agent, Jane Horne, who can help you navigate appraisal challenges and keep the transaction moving forward with confidence.