A low appraisal is one of the most stressful moments in a real estate transaction — and in today’s market, it’s happening more often than people think.

You’ve made an offer. You’ve lined up financing. You’re excited…And then the lender’s appraisal comes in lower than your purchase price.

Now what?

Before panic sets in, know this: A low appraisal doesn’t mean the deal is dead. But it does mean you need a clear plan. This guide walks you through exactly what to do — step-by-step — whether you’re the buyer or the seller.

Why Appraisals Come in Low (Even in a Normal Market)

Appraisers look backward, not forward. They base value on recent comparable sales, not what today’s buyers are willing to pay.

Low appraisals are more common when:

• Prices are fluctuating quickly

• Inventory is rising

• The property is unique or hard to compare

• The area hasn’t had recent sales

• The buyer paid above market value to win a bidding situation

• Market sentiment is shifting

  
  

Sometimes nothing is “wrong” with the home — the comps just don’t support the price.

Why a Low Appraisal Matters for Mortgage Approval

Lenders base your mortgage on the lower of:

• The appraised value or

• The purchase price

  
  

So if you bought for $800,000 but the appraisal comes in at $750,000…

Your mortgage is based on $750,000, not $800,000.

That means you must make up the difference with more down payment — unless we find a solution.

What to Do as a Buyer When the Appraisal Is Low

Here are the most effective strategies — in the exact order you should try them.

1. Ask for a Reconsideration of Value (ROV)

This is not a “fight,” it’s a formal process.

Your mortgage broker can request:

• Additional comparable sales

• Recently sold properties the appraiser didn’t include

• Corrections to factual errors (bedrooms, bathrooms, square footage)

If justified, many appraisers will revise the value.

This step alone can save the deal.

2. Try a Second Appraisal Through Another Lender

Every lender uses different approved appraisers.

A new lender = a new appraisal panel.

If the home is truly worth more, the second appraisal often reflects it.

This is where having an experienced broker is crucial — because we know which lenders allow second appraisals and which ones don't.

3. Renegotiate the Purchase Price With the Seller

A low appraisal is a powerful negotiation tool.

The seller now knows:

• The bank won’t finance the deal at the higher price

• You will need to bring additional cash

• Any other buyer may face the same problem

Most sellers will reduce or split the difference to keep the deal alive — especially if the appraisal gap is small.

4. Add More to Your Down Payment

If the seller won’t budge and the lender won’t move, you may still move forward — but you’ll need to bridge the gap.

Example:

Purchase price: $800,000

Appraised value: $750,000

Difference: $50,000

The buyer must cover that $50K with extra down payment.

This isn’t ideal, but it’s better than losing your deposit if you’ve removed conditions.

5. Walk Away (If You Still Have Conditions)

If you’re still within your financing condition period, a low appraisal may allow you to exit the deal without penalty.

This is why financing conditions are essential — even in competitive markets.

What Sellers Should Do When the Appraisal Is Low

A low appraisal hurts sellers too. Here's how to handle it.

1. Review the Appraisal for Errors

Check for:

• Wrong square footage

• Incorrect comparables

• Missed upgrades

• Outdated or irrelevant comps

  
  

If errors exist, buyers can request an ROV — and many sellers benefit from participating in this process.

2. Consider Renegotiating

If you refuse to adjust your price, there's a real risk the buyer walks — and any future appraisal may come in the same or lower.

Often the best move is to:

• Reduce the price slightly

• Split the difference

• Offer credits (if legally allowed in your province)

3. Prepare Better for the Next Buyer

If the deal falls apart, work with your realtor to optimize:

• Staging

• Listing price

• Updated comps

• Better listing photos

• Highlighted upgrades

  
  

This helps support a stronger appraisal next time.

How to Prevent Appraisal Issues Before They Happen

Buyers:

• Avoid overpaying when bidding wars don’t justify it

• Choose homes with strong comps nearby

• Maintain financing conditions when possible

• Get pre-approved thoroughly (not just pre-qualified)

Sellers:

• Price strategically based on recent data

• Provide a list of upgrades and improvements

• Prepare the home to show its best

• Use accurate square footage and floor plans

Swivel’s Take

A low appraisal doesn’t automatically kill a deal — it just means you need to navigate things strategically

.

With the right broker, you can:

• Challenge the value

• Try a second appraisal

• Restructure the mortgage

• Bring in additional financing options

• Renegotiate in your favour

We’ve handled dozens of low appraisals — some by a little, some by a lot — and most deals still close successfully with the right approach.

If you're buying, selling, or stuck in a low-appraisal situation…

Let’s talk through your options before you make your next move.