Concept of property appraisal

What to Do When the Appraisal Comes in Below the Sale Price

Law Offices of David W. Wilcox  June 6, 2024

Unexpected challenges are no stranger to those navigating the real estate market. One such challenge is when the appraisal of a property comes in below the agreed-upon sale price. This scenario can create significant concerns for both buyers and sellers.  

But low appraisals don't have to derail your plans. With the right strategies and legal support, you can achieve your real estate goals successfully. 

When facing a low appraisal, the counsel of a seasoned real estate attorney is invaluable. In this article, Attorney Wilcox, based in Bradenton, Florida, offers his knowledge of real estate law and perspective as a licensed real estate broker to unpack your legal options if you find yourself with an appraisal below the sale price. 

The Significance of a Low Appraisal

A low appraisal occurs when an appraiser determines that the market value of a property is less than the agreed-upon sale price.

This can be a critical issue in real estate transactions, as lenders typically use the appraisal value to determine the amount of the loan they’re willing to provide. If the appraisal comes in lower than expected, it can affect the financing and potentially impede the sale. 

While it’s not exceedingly common, low appraisals do occur and can complicate real estate transactions. It is essential for both buyers and sellers to understand the potential implications and prepare accordingly. 

What Can Cause a Low Appraisal?

Several factors can lead to a low appraisal: 

  • Changing real estate markets: Real estate markets fluctuate, and an appraisal may reflect a recent downturn or instability in the market that hasn't yet been reflected in sale prices. 

  • Inflated prices: Sometimes, properties are listed at prices higher than their actual market value due to seller expectations or competitive bidding wars. 

  • Local factors: Local factors such as the condition of nearby properties, recent sales, and neighborhood trends can significantly impact an appraisal. 

Steps You Can Take

When an appraisal comes in below the sale price during a real estate transaction, there are several steps you can take to remedy the situation. With each of these steps, the help of a trusted real estate attorney can help mitigate the stress and guesswork of navigating the process: 

1. Review the Appraisal Report 

The first thing you can do when the appraisal comes in below the sale price is to check it for accuracy. Examine the details such as comparable properties, adjustments made, and the overall valuation method used. Mistakes can happen, and if there is any discrepancy, you can address it with the appraiser or request a second opinion. 

2. Renegotiate the Sale Price 

When an appraisal comes in below the sale price, buyers should seek to renegotiate the sale price to align it with the appraisal value. Both parties must come to a mutual agreement on the new price. If a new price is agreed upon, formally amend the purchase agreement to reflect this change. You’ll want to engage an experienced real estate attorney, if you haven’t already, before you make changes to or sign the contract.    

3. Seek Financing Adjustments 

A lender typically bases the loan amount on the appraisal. If the appraisal is lower, the buyer might need to pay a larger down payment or find alternative financing solutions. The buyer can choose to increase their down payment to cover the difference between the appraised value and the sale price. 

4. Legal Considerations 

You’ll want to have your attorney review any appraisal contingency clauses within the purchase agreement. This clause allows the buyer to back out of the contract without penalty if the appraisal is low. By enlisting the help of an experienced real estate attorney, you can confirm that all actions taken are consistent with the terms and conditions outlined in the purchase agreement to avoid breaching the contract.  

5. Legal Remedies 

Engaging in mediation can help resolve disputes amicably without resorting to litigation. If negotiations fail and one party believes the other has violated the terms of the contract, legal action can be pursued.

This may include suing for breach of contract or specific performance, compelling the other party to fulfill their contractual obligations. Under certain conditions, either party may have the right to terminate the contract if an agreement cannot be reached. 

Navigating a low appraisal situation requires careful consideration of legal, financial, and negotiation strategies. Renegotiating the sale price, complying with contractual obligations, and seeking legal remedies when necessary can help you resolve the issue effectively. Consulting with a real estate attorney throughout this process can provide additional protection and guidance tailored to your specific circumstances. 


Can a homeowner dispute a low appraisal valuation? 

Yes, homeowners can dispute a low appraisal. Here’s how: 

  • Identify errors: Carefully review the appraisal report and identify any factual errors or misjudgments. 

  • Provide comparables: Submit additional comparable sales data that support a higher valuation. 

  • Submit a rebuttal: Write a formal rebuttal letter outlining the discrepancies and provide supporting evidence. 

  • Work with the lender: Engage with the lender to understand their process for disputing appraisals. They may facilitate a reassessment or allow for a second appraisal. 

  • Professional assistance: Consult with a real estate attorney or an experienced real estate agent to strengthen your dispute and ensure that all necessary documentation is correctly presented. 

Can an appraiser be held liable for a low appraisal?

Appraisers generally enjoy a degree of protection from liability, but there are exceptions: 

  • Negligence or misconduct: If the appraisal is significantly inaccurate due to negligence, misconduct, or violation of professional standards, the appraiser could be held liable. 

  • Legal action: Homeowners or buyers may pursue legal action if they can prove that the appraiser failed to adhere to the Uniform Standards of Professional Appraisal Practice (USPAP) or state-specific regulations. 

  • State-specific considerations (Florida): In Florida, appraisers must be licensed and adhere to strict regulatory standards. Complaints can be filed with the Florida Real Estate Appraisal Board if there is evidence of misconduct or incompetence. 

By following these steps and considering the relevant legal aspects, buyers, sellers, and homeowners can effectively navigate the challenges posed by low appraisals. Consulting with a real estate attorney can provide additional insights and support throughout the process. 

Contact Attorney Wilcox for Real Estate Legal Advice

Whether you're buying or selling property, having a knowledgeable attorney by your side can make all the difference. The Law Offices of David W. Wilcox stand ready to assist you with your real estate legal matters.  

With over 30 years of experience as a licensed real estate broker and four decades of providing legal advice and representation, Attorney Wilcox is a trusted resource. Whether your real estate needs are in Bradenton, Manatee County, Sarasota County, or elsewhere in Florida, contact him to schedule a consultation and address all your real estate questions and concerns.