How to sell a home with a low appraisal and keep the deal together

Written by Samantha SheltonNMLS 1647301Updated October 2026

A low appraisal does not end your sale. It caps the loan, because on a purchase the lender sizes the mortgage against the lower of the sales price or the current appraised value, which makes the shortfall a cash question rather than an automatic price cut. And since October 31, 2024, you have a formal way to push back: Fannie Mae and Freddie Mac require every lender to run a borrower-initiated reconsideration of value process, limited to one request per appraisal, with as many as five alternative comparable sales attached.

Home seller working through her options by phone after receiving a low appraisal on her pending sale

That leaves six realistic moves, and only two cost you money. Which one you pick depends on whether the appraisal is wrong or the price was. Learn how to sell a home with a low appraisal, including how to read the report for errors, what a reconsideration request must contain, and how to run the math before conceding a dollar. Earlier in the process? Start with our Selling A Home guide.

Key takeaways:

The lender lends on the lower number: On a purchase, loan-to-value is calculated against the lower of the sales price or the current appraised value, so a $15,000 shortfall has to be closed with cash, a price cut, or a split, not with an argument.
You get exactly one reconsideration of value per appraisal: Lenders must give the borrower a written ROV process, and the request can carry up to five alternative comparable sales with MLS numbers and an explanation of why each one fits better.
Relisting is a two-month decision: In the July 2026 REALTORS® Confidence Index Survey, the median home sat 29 days on market and contracts took a median 30 days to close, so going back to market usually costs more in carrying time than splitting the gap costs in cash.

Why did my home appraise low?

An appraisal comes in low for one of six reasons, and four of them are fixable on paper. An appraiser builds an opinion of value from closed sales, so the report is only as good as the sales it used and the facts it recorded. Fannie Mae requires a minimum of three closed comparables, generally settled within the last 12 months, though older sales and sales from competing neighborhoods are allowed when the appraiser explains why.

The wrong comparables: Sales pulled from a different school district, subdivision, or slower-moving pocket of the same ZIP code. The most common error, and the most correctable.
Missed square footage or room count: A finished basement counted as unfinished, a converted attic left out, a fourth bedroom logged as a den. Facts like these are checkable against county records and prior listings.
Undocumented upgrades: A new kitchen or roof gets no adjustment if the appraiser never saw the receipts or the permits.
Fast appreciation outrunning the comps: When prices climb quickly, sales from nine months ago describe a market that no longer exists. A market-conditions adjustment is allowed, but only with support.
Thin comparable data: Rural acreage, waterfront, and one-of-a-kind homes often have no peer sale within a mile, so the appraiser reaches further out and adjusts more heavily. More adjustment, more room for the number to drift.
Condition and deferred maintenance: A failing roof, an aging furnace, or unpermitted work pulls value down, and unlike the items above, that adjustment is usually correct. Some of it is genuinely idiosyncratic, which is why strange factors that affect home value is worth reading first.

Two structural points sellers rarely know. The appraisal belongs to the buyer’s lender, which must give the borrower a free copy promptly upon completion or at least three business days before closing, whichever is earlier. You have no right to a copy, so ask the buyer. And corrections run through the lender, not the appraiser: federal valuation-independence rules permit asking an appraiser to consider additional appropriate property information or correct an error, but prohibit steering the value toward a number. The Appraisal Institute on how appraisers select and adjust comparable sales is a useful primer.

Your six options when the appraisal comes in low

Every path forward is one of six, ranked below from cheapest to most expensive for you. Here is what each costs and when it tends to work.

Option	What it costs you	When it works
Request a reconsideration of value	A few days and the work of assembling comps	You have better recent sales, or a factual error in the report
Buyer brings the gap in cash	Nothing	The buyer has reserves beyond the down payment and still wants the house
Split the difference	Half the gap, taken off your price	Both sides want to close and neither wants to restart; the most common resolution
Reduce the price to the appraised value	The full gap	The appraisal reflects the real market and you need the certainty
Buyer changes loan program or lender	Two to four weeks	Another program’s loan-to-value math closes the gap, or a new lender orders a new appraisal
Cancel and relist	Carrying costs plus a longer listing history	You believe the appraisal is an outlier and can afford to wait

One caution on the fifth row: a new lender does mean a new appraisal on conventional financing, but it also means new underwriting, and nothing guarantees the second number lands higher.

How to request a reconsideration of value

A reconsideration of value asks the appraiser to revisit an opinion of market value using data or corrections the original report did not include, and on Fannie Mae and Freddie Mac loans the borrower gets exactly one per appraisal. The lender must hand the borrower a disclosure explaining the ROV process when it delivers the report. Opinion carries no weight here. Evidence does. A complete request includes:

Identification of the problem: The specific areas of the report you believe are unsupported, deficient, or factually wrong, listed one by one rather than as a general complaint about the number.
Up to five alternative comparable sales: Fannie Mae caps borrower-supplied comparables at five, each needing its MLS listing number and a written explanation of why it fits better than what the appraiser used.
Factual corrections with proof: Square footage from an official measurement or county record, bedroom and bath counts, lot size, and any structure the report missed.
Improvement documentation: Permits, contractor invoices, and dated photos for work completed since the last sale. A receipt beats a description.
The administrative details: Borrower name, property address, the appraisal’s effective date, the appraiser’s name, and the request date.

The appraiser responds inside a revised appraisal report with commentary on the conclusions whether or not the value changes, so even a denial produces a written record for the next negotiation. Two framing rules keep a request credible: ask for a correct value rather than a higher one, and never build the argument around the loan amount the buyer needs. Note also that the buyer is the borrower, so the request is filed through their lender and your job is to hand your agent the ammunition. Our step-by-step on how to appeal a low appraisal walks through assembling the comp package.

Worked example: a $15,000 gap on a $310,000 contract

Say your Waterford home is under contract at $310,000 and the appraisal comes back at $295,000. The buyer is putting 10% down on a conventional loan. Because loan-to-value is calculated against the lower of price or appraised value, the lender now lends against $295,000.¹

The original plan: $310,000 price, $31,000 down, $279,000 loan.
What the lender does now: Sizes the loan off $295,000. At the same 90% loan-to-value, that is a $265,500 loan, $13,500 less than the buyer planned to borrow.
Buyer covers the whole gap: Price stays $310,000 and the buyer brings $44,500 to closing instead of $31,000, an extra $13,500 out of pocket.
Fifty-fifty split: You drop to $302,500 and the buyer brings $37,000 instead of $31,000, $6,000 more than planned. You give up $7,500 of proceeds, and the two halves close the same $13,500 loan shortfall.
You cut to the appraised value: $295,000 price, $29,500 down, $265,500 loan, and $15,000 off your net.

Run that $7,500 against what waiting costs. Two more months of payments, taxes, insurance, and utilities frequently exceeds it, and the next buyer’s appraiser reads the same comparable sales. If your proceeds are funding your next purchase, a smaller down payment on the next house is a payment problem you can shop, not a wall.

How your buyer’s loan program changes your options

The buyer’s program decides how much leverage you have, because two of the three major programs give the buyer a written right to walk. Know which one you are dealing with before you take a hard line.

Conventional loans

Conventional financing gives you the most room, because no government-mandated escape language sits in the contract. The appraisal contingency in the purchase agreement governs, and if the buyer waived it, the buyer owns the gap. That is not rare: in NAR’s July 2026 survey, 21% of buyers had waived the appraisal contingency, up from 17% a month earlier, a figure agents self-report about their own most recent transaction, not a measured count.

FHA loans

FHA contracts must carry the amendatory clause, which is unambiguous: the purchaser “shall not be obligated to complete the purchase of the property described herein or to incur any penalty by forfeiture of earnest money deposits or otherwise” unless given a written statement of an appraised value of not less than the stated amount. The buyer keeps the privilege of proceeding anyway, but the choice is theirs.² FHA appraisals are also logged against the property’s case number and stay valid for 180 days from the effective date, so a low FHA number can follow the house to the next FHA buyer.

VA loans

VA purchase contracts must include the escape clause at 38 CFR 36.4303(k)(4), which lets the buyer walk without forfeiting earnest money when the contract price exceeds the reasonable value VA established. The buyer may still proceed and pay the difference in cash.³

When lowering your price is the cheapest option

Cut the price when the appraisal is right, and only then. The test is whether you can name three closed sales in the last 12 months that support your contract price and explain why the appraiser’s choices were worse. If you cannot, the report is probably describing your market accurately.

Price to the appraisal when the comps agree with it: A second buyer’s appraiser reads the same closed sales, so the gap tends to reappear.
Split when the evidence is mixed: A shared concession keeps a qualified buyer already through underwriting, worth real money against an unknown replacement.
Hold firm only with documentation in hand: Better comps, a factual error, or an unpermitted-work correction. Conviction alone loses to a revised report.
If you relist, fix the reason first: A price cut plus visible improvement reads differently than a price cut alone, and improving your home’s curb appeal is the cheapest lever between listings.

Whatever you choose, recalculate your net rather than your price. Commission is negotiable and never fixed, transfer tax and title costs move with the sale price, and what matters is the figure that lands in your account. Our pricing and preparing hub covers setting a number that survives an appraisal in the first place.

What Michigan sellers should know

Michigan produces thin-comp appraisals at a higher rate than most states, for a reason you can point at on a map. The state has roughly 11,000 inland lakes and 3,288 miles of Great Lakes shoreline, the longest freshwater coastline in the world, so a large share of Michigan housing stock sits on or near water with no peer sale down the street.

Waterfront and acreage strain the three-comparable rule: On a lakefront parcel the appraiser may have to reach into a competing neighborhood or use an older sale. Both are allowed with a written explanation, and both widen the adjustment range.
Build the comp file yourself: In rural counties, sales that never hit an MLS are common. County register-of-deeds records and neighboring-lake sales are legitimate ROV evidence when documented, and the FHFA House Price Index for your area supports a market-conditions adjustment when your submarket has appreciated faster than the comps suggest.
A price cut moves your transfer tax, slightly: Michigan charges $8.60 per $1,000 of sale price, $3.75 per $500 to the state plus 55 cents per $500 to the county, and state law makes the seller liable. Dropping $310,000 to $295,000 trims that bill by about $129, nowhere near the $15,000 conceded.
Winter appraisals carry extra risk: Snow hides roof condition, grading, and outbuildings, and a January walkthrough of a lake property can miss frontage detail entirely. If your sale is winter-timed, hand over in-season photographs.

How Align helps before you list

If you are buying your next home too, talk to Samantha before you list. Knowing your buying power and your timeline first lets you price and prepare your home with a plan, not a guess.

Over the last 12 months, her loans averaged under 14 days from application to clear to close, across more than 100 loans. Your closing date is set by your purchase agreement. Her job is to have your loan ready well before it.

Plan a buy before you sell

Sources: Align Lending loan records, 12 months to October 2026.

FAQ: Selling a home with a low appraisal

Here are answers to common questions about selling a home with a low appraisal.

Can a low appraisal be challenged?

Yes, through a reconsideration of value. The buyer’s lender must provide a written ROV process, and the request can carry better comparable sales, factual corrections such as square footage or bedroom count, and documentation of improvements the appraiser missed. Opinion alone will not change a report. Bring recent sales the appraiser did not use and explain why each fits better, as our guide to appealing a low appraisal lays out.

Who pays the difference when a home appraises low?

Whoever agrees to. The lender finances only against the appraised value, so the buyer can bring extra cash, you can lower the price, or you can split the gap. If the purchase agreement includes an appraisal contingency and no one moves, the buyer can normally cancel and recover the earnest money.

Should I lower my price after a low appraisal?

Only if the appraisal reflects real market value. Holding out usually means the next buyer’s appraiser reaches the same conclusion after weeks of carrying costs, since they read the same closed sales. If you believe the report is wrong and have comparable sales to prove it, request a reconsideration of value first.

Does a low appraisal follow the home to the next buyer?

Not on conventional financing. Appraisals belong to the lender, so a new buyer with a different lender gets a new appraisal and a new opinion of value. FHA works differently: the appraisal is logged against the property’s FHA case number and stays valid for 180 days from its effective date, so a new FHA buyer can inherit the same number. Our overview of the home appraisal process explains who orders what.

The bottom line on selling with a low appraisal

A low appraisal caps the loan, not the sale. The lender sizes the mortgage against the lower of the sales price or the appraised value, so a $15,000 shortfall becomes a cash question with six answers: challenge the report, let the buyer cover it, split it, cut the price, change loan programs, or walk. Your first move should almost always be the free one. You get one borrower-initiated reconsideration of value per appraisal, it can carry up to five alternative comparable sales, and it produces a written response either way. Only then do you weigh a concession against roughly two months of carrying costs. The CFPB’s guidance on appraisals and buyer financing is a good neutral reference to share with your buyer.

If you’re selling to buy your next home, talk to Align Lending. We’ll shop your next mortgage across our lender network and show you exactly what a smaller down payment does to your payment before you answer the buyer. Call 248-506-5727 or start online.

Footnotes:

1. Example figures in this article are hypothetical and for educational purposes only; they do not constitute an advertisement of credit terms or a rate quote under federal or state lending laws. Actual loan amounts, down payments, and closing figures depend on the buyer’s application, program guidelines, and market conditions. Return to text.

2. Align Lending is not acting on behalf of or at the direction of FHA or HUD. FHA amendatory clause language, appraisal validity periods, and case number policies are set by HUD and are subject to change. Return to text.

3. Align Lending works with VA-approved lenders and is not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency. Return to text.

Sources: purchase-transaction loan-to-value calculated by dividing the original loan amount by the property value, defined as the lower of the sales price or the current appraised value, Fannie Mae Selling Guide B2-1.2-01. Borrower-initiated reconsideration of value limited to one per appraisal, borrower submission of no more than five alternative comparable properties with MLS listing numbers and explanations, required lender disclosure of the ROV process when the appraisal report is provided to the borrower, required request contents, the appraiser’s response delivered as a revised appraisal report with commentary regardless of outcome, and the prohibition on borrower-initiated ROVs after loan closing, Fannie Mae Selling Guide B4-1.3-12. Mandatory ROV implementation for loans with application dates on or after October 31, 2024, Fannie Mae Selling Notice and Freddie Mac Bulletin 2024-F. Minimum of three closed comparables in the sales comparison approach, the general 12-month settlement window, and the allowance for older sales or sales from competing neighborhoods with written explanation, Fannie Mae Selling Guide B4-1.3-08. Final Interagency Guidance on Reconsiderations of Value of Residential Real Estate Valuations issued July 18, 2024 by the Federal Reserve Board, CFPB, FDIC, NCUA and OCC; OCC Bulletin 2024-18. Permitted requests that an appraiser consider additional appropriate property information, provide further detail or substantiation, or correct errors, and the prohibition on causing value to be based on any factor other than the appraiser’s independent judgment, 12 CFR § 1026.42. Free copy of all appraisals and other written valuations delivered to the applicant promptly upon completion or at least three business days before consummation, whichever is earlier, 12 CFR § 1002.14(a)(1). FHA amendatory clause language, HUD Amendatory Clause model document (March 2023). FHA appraisal validity of 180 days from the effective date and logging of appraisals against the FHA case number, HUD Handbook 4000.1 and FHA Connection Appraisal Logging. VA escape clause requiring that the purchaser not incur any penalty by forfeiture of earnest money when the contract price exceeds the reasonable value established by VA, 38 CFR § 36.4303(k)(4). Median 29 days on market, median 30 days to close, 12% of contracts with delayed settlements, 6% of contracts delayed due to appraisal issues, and 21% of buyers waiving the appraisal contingency (17% in June 2026), National Association of REALTORS®, July 2026 REALTORS® Confidence Index Survey (published August 11, 2026; 2,019 respondents, of whom 930 had a client in the last month); apart from median days on market, which NAR estimates from the survey combined with MLS data, these are self-reported responses from REALTORS® about their most recent transaction, not measured transaction outcomes. Approximately 11,000 Michigan inland lakes and 3,288 miles of Great Lakes shoreline, Michigan Department of Environment, Great Lakes, and Energy (michigan.gov). Michigan state real estate transfer tax of $3.75 per $500 of value, MCL 207.525; county real estate transfer tax of 55 cents per $500 in a county with population under 2,000,000, MCL 207.504; seller or grantor liability for the state transfer tax, MCL 207.523. Real estate commissions are negotiable and are not set by any board, association, or MLS; practice changes effective August 17, 2024 prohibit offers of buyer-broker compensation on the MLS and require written buyer agreements, National Association of REALTORS settlement practice changes.

This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Appraisal policies, agency guidelines, program rules and Michigan tax rates change and vary by property, county and loan program; confirm your figures with your lender, your closing statement, and a qualified professional. Figures shown are illustrative, are not a rate quote or an offer of credit, and are subject to change. Align Lending is an independent Michigan mortgage broker, NMLS #2041154, and is not a real estate listing brokerage.