What the appraisal can do to your deal

You accepted $410,000. The appraisal came back at $395,000. The buyer's agent is on the phone and your closing is in three weeks.

This is a solvable problem with four possible outcomes, and knowing them before the call comes makes the conversation much shorter.

What the appraisal is actually for

It is not for you and it is not for the buyer. It is for the lender.

The lender is about to secure a loan against the property and wants an independent opinion of what the collateral is worth. If the house is worth less than the contract price, the lender will not lend against the contract price — they will lend against the appraised value.

That is the whole mechanism. The appraiser is not judging your house. They are protecting a balance sheet.

What happens when it comes in low

Say the contract is $410,000, the appraisal is $395,000, and the buyer is putting 10% down.

The lender will now lend based on $395,000, not $410,000. The buyer's loan shrinks accordingly. The $15,000 gap has to come from somewhere, and there are exactly four places.

The buyer brings cash. They cover the gap out of pocket, on top of their down payment. Possible if they have it. Many buyers do not — the down payment was the stretch.

You reduce the price. To $395,000, or somewhere between. You absorb the gap.

You split it. Price moves to $402,500, the buyer brings the rest. The most common resolution, because it distributes a problem neither side caused.

The deal dies. If the contract has an appraisal contingency, the buyer can usually walk with their deposit.

Should you challenge it?

Sometimes, and it works more often than sellers expect — but only with evidence.

A reconsideration of value is a formal request to the lender, submitted through the buyer's loan officer. It is not an argument that the appraiser was wrong. It is a submission of comparable sales the appraiser did not use, with an explanation of why they are better comparables.

It has a chance when: the appraiser used sales from a weaker neighbourhood, missed a recent closing that supports your number, overlooked a renovation or a finished space, or was from out of the area and does not know that two streets matter differently.

It does not have a chance when: you simply disagree, or your evidence is other houses' asking prices. Asking prices are not evidence.

Prepare it properly and submit within days. A vague complaint gets a vague answer.

How to reduce the risk before it happens

Price against real closings, not against hope. An appraiser is doing roughly what a good comparative market analysis does. If your price cannot be supported by comparable sales, the appraisal is where that becomes everyone's problem.

Document your improvements. Leave a written list at the house — what was done, when, and roughly what it cost, with permits if you have them. An appraiser working from the public record will not otherwise know about the $30,000 you put into the kitchen in 2023.

Make sure the appraiser can see everything. Access to the basement, the attic, the garage. Utilities on.

Have your comps ready. If your agent has done the pricing work properly, those same comparable sales can be handed to the appraiser on arrival. Appraisers are not obliged to use them. Many will look.

Be realistic about a bidding war. If the house went $25,000 over asking because three buyers wanted it, there is a reasonable chance the appraisal lands between. Have the conversation at acceptance rather than at week four.

If it comes in low on a cash buyer

It does not matter. No lender, no appraisal requirement. The buyer may order one for their own comfort and may try to renegotiate, but there is no financing mechanism forcing the issue.

The part that is genuinely in your control

Most low appraisals are priced into existence at the listing stage. A house listed at a number the comparable sales support, selling at or near that number, appraises without drama.

The ones that have problems are the ones where the price came from somewhere other than the data.

That is the argument for a pricing conversation that is honest in week one, even when a higher number would be more pleasant to hear.

Zack DeCaro is a licensed real estate broker in Connecticut and Massachusetts with Property Works New England in Rocky Hill. He has prepared 1,500+ broker price opinions.