What Happens with a Low Appraisal?

When an appraisal comes in lower than what a buyer has offered there are a few options. It is important to note that a buyer can never be forced to pay more for a house than what it is valued at! That said, in a competitive market many buyers are submitting a guarantee with their offers that they will pay a specific amount ABOVE the appraised value in the event of a low appraisal. This is a tactic that can help secure a home when there are several offers for the seller to consider and should be looked at as the long term investment that it is.

Assuming there was no guarantee in the offer (and that the offer included the protections of a financing addendum), then the buyer cannot be forced to pay more than the appraised value. The sellers in most cases will lower the purchase price to the appraised value and the buyer gets the house for less!

A seller can also request that the buyer pay more than the appraised value up to the original agreed upon price. The buyer always has the right to terminate the agreement and begin their search anew.