Will My House Appraise? (and What Happens If the Appraisal Comes In Low)

by Brian Wittman

You priced it right, the showings were busy, and an offer came in at your number. Maybe over it. The inspection went fine. You're already thinking about the move.

Here's what you may not realize. The buyer's lender doesn't lend on your price. It lends on the appraisal, and that number gets decided by someone you'll never talk to, looking at sales that already closed.

Say the contract says $400,000 and the appraisal comes back at $385,000. That's a $15,000 hole three weeks before closing. Either the buyer finds more cash, you give up money you were counting on, or the deal comes apart.

What happens if the appraisal comes in low?

When the appraisal comes in below the contract price, the lender bases the loan on the lower number, so somebody has to cover the difference or the price has to change. The buyer can bring more cash, the seller can lower the price, or the two can split it. If neither side moves, the buyer's contract terms decide whether they can walk away. And if the appraiser missed something, the buyer can ask the lender to take a second look.

That's the whole problem. The rest of this piece is the math behind each way out, and how a seller can see it coming before the appraiser ever shows up.

What does an appraiser actually look at?

An appraisal is a licensed appraiser's opinion of what the home would most likely sell for in a normal, open market. The buyer's lender picks the appraiser, usually through a management company, not the buyer, the seller or either agent.

The appraiser builds that opinion from closed sales. Fannie Mae, one of the two companies whose rules govern most conventional loans, requires at least three closed comparable sales, generally from the last 12 months. Active listings and pending sales can support the number, but they can't carry it.

So your list price isn't a comp, and neither is your neighbor's list price or the fact that you got four offers. If the closed sales around you don't support your price, the appraisal won't either.

How is an appraisal different from a CMA, your assessment or a Zestimate?

You've probably seen four numbers for the same house. Only one of them has a lender's money behind it.

The appraisal comes from a licensed appraiser the lender selects, and it's the number the loan is based on.
A CMA, or comparative market analysis, comes from a real estate broker. Illinois law requires a broker's CMA to say, in writing, that it's not an appraisal. It's a pricing tool, and it's usually free.
Your assessed value comes from the county, and it exists for one job: your property tax bill. Outside Cook County it's set at about a third of market value. In Cook, it's 10 percent. No lender uses it.
A Zestimate comes from an algorithm. Zillow's own page says it isn't an appraisal and can't be used in place of one.

If you want the closest preview of an appraisal, it's a CMA built only on closed sales, priced the way an appraiser would price it.

What is an appraisal gap, and who pays it?

The appraisal gap is the contract price minus the appraised value. Here's what a $15,000 gap does to a buyer who planned to put 10 percent down on a $400,000 house, under conventional loan rules.

If this happens	Buyer's extra cash	Seller gives up
Buyer covers the gap, keeps a 90% loan	$13,500	$0
Buyer keeps the same loan amount	$0, but a bigger loan against the value	$0
Seller drops the price to $385,000	$1,500 less	$15,000
They split it, price $392,500	$6,000	$7,500

Notice the first row. The buyer doesn't need the full $15,000, because they were already putting 10 percent down on that part of the price. They need $13,500.

The second row needs no extra cash, but it pushes the loan to about 94 percent of the lender's value instead of 90. That usually means a higher mortgage insurance tier and a bigger monthly payment, and it only works if the buyer's loan program allows it. Don't agree to that second row until your lender shows you the new payment, because that's where the 94 percent shows up.

Here's the one that surprises people. A buyer who planned 20 percent down on that same $400,000 house would borrow $320,000. Against a $385,000 appraisal, that's about 84 percent, so mortgage insurance is suddenly back on the table. Staying at 80 percent takes $12,000 more at closing. The buyer who "had 20 percent down" finds out they don't, measured against the lender's number. So ask your lender what a low appraisal would do to your cash to close before you write the offer, not after.

Freddie Mac looked at millions of purchase appraisals from 2015 to 2020 and found roughly 1 in 12 came in below the contract price. That's national and a few years old, but it's a fair reminder that this isn't rare.

What is appraisal gap coverage?

Appraisal gap coverage is a promise the buyer makes up front, in the offer, about what happens if the appraisal comes in low. It shows up most in competitive bidding, when a buyer is working out how to buy in a seller's market without overpaying. It usually takes one of three shapes:

The buyer agrees to cover the whole gap in cash.
The buyer agrees to cover it up to a set dollar amount.
The buyer keeps the right to walk away if the appraisal is low.

How your deal handles it depends on what's in your contract. Check it, and talk to your attorney if you have one.

Now, a promise is only as good as the cash behind it. If a buyer offers $15,000 of gap coverage at 10 percent down, they need to actually have $13,500 more sitting in the bank on closing day. As a seller, you can reasonably ask to see proof of those funds before you accept the offer.

Can you challenge a low appraisal?

Yes, if you're the buyer. You do it through your lender.

On a conventional loan, the buyer can ask for one reconsideration of value per appraisal, before closing. The request has to point to what the appraiser got wrong or missed, and it can include up to five comparable sales the buyer thinks should have been used. The lender reviews the request, and the lender decides whether to accept what the appraiser comes back with. If the number doesn't move, the buyer can't demand a new appraisal.

On an FHA loan, a reconsideration request runs through the lender's underwriter. VA loans have their own process for a low appraisal, so verify the details with your lender.

A seller can't file one. But the listing agent can get strong comparable sales to the buyer's agent quickly, and the buyer decides whether to use them.

Look, a reconsideration fixes mistakes. That's all it does. A wrong square footage, a missed renovation, a comp from the wrong side of a busy road. If the appraiser's comps are sound, it won't move the number. That's the market talking.

Does the seller get a copy of the buyer's appraisal?

Usually not. You'd have to ask. Federal law requires the lender to give the appraisal to the borrower, which is the buyer, free of charge. The seller sees it only if the buyer chooses to share it.

If you're being asked to drop your price because of an appraisal, ask to see the report first. You deserve to know what the number is built on before you give up money over it.

Will my house appraise? Here's how a seller sees it coming

This is the part you control. Most of it happens before the house ever hits the market.

Price to the closed sales, not to the highest offer you hope to get. The appraiser will back into your value from at least three closed sales. If your price sits above what those sales support, the gap is coming no matter how many offers you get.

Compare offers on the money that survives the appraisal. Here's an illustration. Same house, two offers:

Offer one is $410,000 with an FHA loan and no gap coverage.
Offer two is $400,000, conventional, 25 percent down, with $10,000 of gap coverage.

Say the house appraises at $395,000. With an FHA loan, a buyer can usually walk away without losing their earnest money when the appraisal comes in low, so offer one likely becomes a $395,000 negotiation or a dead deal. Offer two still closes at $400,000, because that buyer agreed to cover up to $10,000 of any gap and has the cash to do it. The smaller offer was worth more.

Watch the credits. A seller credit doesn't lower the price, so a $400,000 contract with a $10,000 credit still needs a $400,000 appraisal. If your house already sits at the top of the comps, a price cut can be cleaner than a credit. Either way, a credit comes out of your proceeds, which makes it part of what selling actually costs in Illinois.

Hand the appraiser facts, not a number. Appraisers welcome information that helps them get the value right. Influencing them isn't allowed. Through your agent, have a one-page list ready:

Improvements with the year and cost: roof, furnace and air, windows, kitchen, baths, finished basement.
Permits for that work.
The closed sales your agent used to price the house, with MLS numbers.
Anything an appraiser can't see from the driveway, like a newer sewer line or updated electrical.

Decide about a pre-listing appraisal. You can pay for your own appraisal before you list. It gives you a neutral number and a preview of the comps an appraiser will likely pick. But the buyer's lender won't use it, because the lender chooses its own appraiser. Its real value is as a pricing anchor before you list, not as a substitute for the buyer's appraisal. A CMA built on closed sales gets you most of the way there for free.

What about appraisal waivers?

Sometimes there's no appraisal at all. Fannie Mae and Freddie Mac can waive it on some purchases, generally when the loan is no more than 90 percent of the home's value. The offer comes from the lender's automated underwriting, and the lender decides whether to use it. You don't get to choose. Neither does the other side.

For a seller, a buyer whose loan gets a waiver takes the gap risk off that deal. You just can't know in advance which offer will get one. For a buyer, skipping the appraisal skips the independent check on price, and you can still ask for one.

One more change is coming. Starting November 2, 2026, appraisal reports on most conventional loans move to a new standard format. It changes how the report looks, not how value gets decided.

The Bottom Line

The appraisal doesn't care what the house is listed at or how many people wanted it. It cares what similar homes actually closed for.

If you're buying, a low appraisal is a cash problem first, and the real number is usually a little less than the gap. If you're selling, it's a pricing problem. You can see it coming. Most of it's solved before the sign goes in the yard. Know what the closed sales support, compare offers on what survives the appraisal, and the gap stays a number on someone else's worksheet.

Frequently Asked Questions

Who pays for the appraisal?

Usually the buyer pays for it, as part of the loan costs that come with the mortgage. The lender can charge for the appraisal itself, but federal rules say it can't charge the buyer for a copy.

Can a seller refuse to lower the price after a low appraisal?

Yes. You don't have to change the price just because the appraisal came in low. Then it's up to the buyer and their contract whether they cover the gap, renegotiate or walk away.

Does a low appraisal kill the deal?

Not automatically. Plenty of deals close after a low appraisal, with the buyer covering the gap, the price coming down, or a split. Whether a buyer can cancel depends on the contract, so check yours and talk to your attorney if you have one.

How long is an FHA appraisal good for?

On an FHA loan, an appraisal is good for 180 days and can be updated to last up to a year. It's tied to that loan's case number, so if the deal falls apart, the next buyer's lender orders a new one.

Is a pre-listing appraisal worth it?

It can be, if you want a neutral number before you price. Just know the buyer's lender will order its own. A CMA built on closed sales gives you most of the same information for free.

Can I get my house to appraise higher?

You can't talk an appraiser into a number. You can make sure they don't miss anything. Clean, finished, documented improvements with permits, and a list of what's been updated, give the appraiser the facts they need to get it right.

If you've been through a low appraisal and something here doesn't match what happened at your closing table, tell me. I'd rather fix it than leave it wrong.

If you're thinking about selling in the southwest suburbs, find out what the closed sales around you support before a buyer's appraiser does. See what your home is worth and price it where the appraisal will meet you.

Brian Wittman is a licensed real estate broker (Real Broker LLC), mortgage loan originator (NMLS #2646598, NEXA Mortgage, LLC, Equal Housing Lender), and life insurance producer (Levinson & Associates). This article is for educational purposes only and is not financial, lending, tax, or legal advice, an offer, or a commitment to lend; all loans are subject to credit approval. Information is accurate as of the publication date; for current details and full disclosures, visit https://bluejeanbroker.com/disclosures.