If your lender’s appraisal comes in below the agreed purchase price, ask the lender how the valuation changes your loan and cash needed to close, then review your signed contract before deciding whether to renegotiate, bring more cash, or cancel. “Just use financing” does not answer those questions. The agent’s comment alone does not establish misconduct or determine your rights; your loan terms and contract do.
What a below-price appraisal means for your mortgage
An appraisal is an opinion of a home’s value. The lender uses its valuation in evaluating the mortgage, so a value below the purchase price can affect the loan amount and the cash you must contribute. Do not rely on an agent’s summary: ask the lender for a copy of the appraisal and read it. The Consumer Financial Protection Bureau (CFPB) explains what a low appraisal may mean for buyers in its appraisal guidance, last reviewed September 11, 2024.
Ask your lender to explain the effect on your maximum loan amount, down payment, loan terms, and cash to close. If the appraisal changes the terms or costs disclosed to you, ask whether you will receive a revised Loan Estimate and what has changed. The CFPB notes that a low appraisal can be a reason for a revised Loan Estimate; its guidance on differences between a Loan Estimate and Closing Disclosure was last reviewed September 11, 2024.
What “just use financing” leaves unanswered
That phrase does not establish that the lender will approve the loan you expected against the lower value, how much additional cash you would need, or whether the loan’s terms would change. It also does not tell you whether your contract gives you an appraisal or financing contingency, what notice deadlines apply, or what happens to your earnest money if you do not proceed. Only the lender can explain the loan-specific figures; only the signed contract, interpreted in light of applicable local law, can clarify your contractual options.
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So the comment is a reason to seek specifics, not proof that the agent violated a rule or that you must close. Ask the agent to explain what they meant, but do not let that explanation substitute for lender figures or a review of the contract.
What to do next
- Get the appraisal from your lender. Check the property details for factual errors or omissions, and review the comparable sales the appraiser used. CFPB guidance says to ask the lender for a copy if you have not received one.
- Get the revised loan numbers. Ask the lender how the appraised value affects the loan amount, down payment, terms, and cash to close. Request an updated Loan Estimate if applicable, and ask the lender to explain any changes.
- Ask about a reconsideration of value if you have evidence. Point to specific factual errors or omissions, relevant comparable properties the appraisal did not adequately consider, or evidence that prohibited bias influenced the appraisal. Ask the lender how to submit a reconsideration-of-value request; procedures can vary. Disagreement by itself does not guarantee a different value. The CFPB describes these grounds in its reconsideration-of-value guidance, published October 6, 2022.
- Discuss the price with the seller. Use the appraisal as evidence in asking whether the seller will reduce the agreed price. The CFPB says buyers can often use the lower appraised value to negotiate. Whether the seller agrees is a negotiation, not a guaranteed outcome.
- Review the contract before cancelling or missing a deadline. Have a qualified real-estate attorney or another appropriate local professional review the financing and appraisal provisions, notice requirements, deadlines, and earnest-money terms. Cancellation can carry costs depending on the contract, so do not assume you can walk away without consequences.
How to weigh your choices
There is no universally right choice; compare the real cost and risk of each option using the lender’s figures and the contract’s deadlines.
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- Request reconsideration: Most useful when you can identify concrete errors, omitted information, or comparable sales that support a different value. The lender’s process may vary, and the result is not assured.
- Negotiate a lower price: The appraisal can support a request, but the seller may decline. A lower price may reduce the amount you need to pay above the appraised value, depending on the loan and final terms.
- Bring additional funds: This may let you proceed at the agreed price if the lender approves the resulting loan and you can afford the cash required. Decide only after confirming the cash-to-close figure and considering your remaining financial cushion.
- Consider cancellation: Whether you can cancel, how you must give notice, and whether you risk losing earnest money depend on the signed contract and applicable law. Get local advice before acting.
A lower appraisal is not automatically proof that the appraiser was wrong. Valuations may differ for legitimate reasons, including which comparable sales were selected, the dates and property features considered, or the valuation method used. The CFPB explains why borrowers may receive different valuations in its valuation guidance, last reviewed June 27, 2024.
The CFPB’s consumer guidance puts the risk plainly: “It is very risky to purchase a home for more than the appraised value.” That does not decide your personal choice, but it is a reason to understand the gap, your financing, and your contractual options before proceeding.
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