Margaret Rome's Blog


Uh Oh...The Appraisal Comes In Low


When the appraisal comes in low, read the contract.

This is not the time to panic.

 Are you the buyer's agent, or are you the seller's agent?

The lender is the first to get the report,  then the buyer is advised, and then the buyer's agent receives the news. Or sometimes, the buyer's agent gets notified before the buyer.

To deal with this situation read the contract.



Here is an appraisal contingency for our Maryland contract of sale.


''If the appraised value of the Property is less than the Purchase Price as set forth in the Contract, Buyer shall notify Seller, in writing, of such fact within  days from receipt of the written appraisal and shall include a copy of the written appraisal. The written notice from Buyer to Seller shall state whether: A) Buyer elects to proceed to purchase the Property notwithstanding the appraised value of the Property; OR B) Buyer requests the Seller to reduce the Purchase Price to the appraised value. In the event Buyer notifies Seller of Buyer's election to proceed to purchase the Property notwithstanding the appraised value, the Contract shall remain in full force and effect and Seller shall have no obligation, right or election as provided in this Addendum.

Upon receipt of the written notice from Buyer of Buyer's request to reduce the Purchase Price to the appraised value, Seller, at Seller's election and upon written notice to Buyer not later than  days following receipt by Seller of the written notice from Buyer, may either: A) agree to reduce the Purchase Price to the appraised value of the Property, in which event the Contract shall remain in full force and effect; OR B) decline to reduce the Purchase Price to the appraised value.

If Seller declines to reduce the Purchase Price to the appraised value, or fails to respond within the time period above, Buyer, at Buyer's election, not later than  days following receipt of the written notice from Seller, or from the date that such written notice was to have been provided by Seller, shall either: A) declare the Contract null and void and of no further force and effect, in which event, the Deposit(s) shall be disbursed in accordance with the Deposit(s) paragraph of the Contract; OR B) agree to purchase the Property at the Purchase Price notwithstanding the appraised value of the Property, in which event the Contract shall remain in full force and effect, and Buyer shall pay any increase in the down payment, interest rate, point(s) or loan origination fee(s) as required by lender without contribution by Seller except as otherwise provided in the Contract.''




Those blanks are there for a reason. Watch the dates and make sure you give notification in the allotted time. 

Almost everyone has encountered a property that has under appraised. 

Have you?


If you would like to talk about your home?

Call Margaret Rome


Margaret Rome

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Comment balloon 14 commentsMargaret Rome Baltimore 410-530-2400 • October 10 2019 04:22PM


Morning Margaret.

Around my area the price is either lowered, or the buyer walks with no other obligation.  Doesn't happen often, the seller usually lowers the price to the appraised value

Posted by James Dray, Exceptional Agents, Outstanding Results (Fathom Realty) 6 months ago

While things are calming down a bit...we too have an appraisal contingency...and some people in months past were choosing to waive it with cash purchases.

Posted by Sally K. & David L. Hanson, WI Real Estate Agents - Luxury - Divorce (EXP Realty 414-525-0563) 6 months ago

Good morning Margaret. While I find the language in your contract wordy it does cover the topic. A low appraisal is something everyone with years of experience has encountered. Enjoy your day!

Posted by Wayne Martin, Real Estate Broker - Retired (Wayne M Martin) 6 months ago

Good morning, Margaret Rome, Baltimore Maryland rarely has that happened to us, but when it did, we challenged that appraisal and provided more comps to justify the sale price.... the adjustments were made.... 

Posted by Barbara Todaro, Marketing Agent for The Todaro Team (RE/MAX Executive Realty ) 6 months ago

Oh yes!  I have dealt with several transactions where appraisals came in low.  A couple came in really low.  And, there were a couple where I knew there was going to be a problem the moment the appraiser came to the door. 

On one of my last transactions, I had suspicions the investor buyer had too cozy of a relationship with the bank and the appraiser.  And, they were using a low appraisal process to beat down my seller on price.  No amount of showing the comparable sold properties would sway him.  There was a lot of buyer activity on the home, but this was the first offer received.  I would have liked to have returned the home to the market, but my seller was emotionally exhausted from recent life events, and wanted to complete the sale and take the hit.  I haven't felt right about it since!  

Posted by Myrl Jeffcoat, Greater Sacramento Real Estate Agent (GreatWest Realty) 6 months ago

Lots of reasons why aproperty might under appraise and as an agent it is our duty to make sure our client abides by the dates in the contract. There are always options, and it is our job to explain those options to our clients,buying or selling when a home does not appraise.

Posted by Nick Vandekar, 610-203-4543, Tredyffrin Easttown Realtor, Philly Main Line (Long & Foster Real Estate Inc 610-225-7400) 6 months ago

Good morning Margaret Rome, Baltimore Maryland - that is certainly a tense time depending on the resources and willingness of the parties.

Posted by Grant Schneider, Your Coach Helping You Create Successful Outcomes (Performance Development Strategies) 6 months ago

In  our still very competitive market where multiple offer abound, crafting a strong offer for buyers is necessary. My buyer is in contract now on an San Francisco duplex with lots of "issues." To make his offer stronger, we waived the appraisal continency, leaving in only the financing contingency. There were 7 offers if I remember correctly what the listing agent told me; my buyer's was not the highest, but had the best terms.

When the appraisal came in yesterday "at value" he and I both were very happy!

Posted by Lottie Kendall, Helping make your real estate dreams a reality (Compass) 6 months ago

Hello Margaret - a lot of information can be learned when the purchase agreement/sales contract is read.  It's important to understand the documents buyers and sellers are signing/acknowledging.  

Posted by Michael Jacobs, Los Angeles Pasadena 818.516.4393 6 months ago

Michael Jacobs  Well said... "It's important to understand the documents buyers and sellers are signing/acknowledging.  "

Posted by Margaret Rome Baltimore 410-530-2400, Sell Your Home With Margaret Rome ( HomeRome Realty 410-530-2400) 6 months ago

Margaret Rome, Baltimore Maryland 

In one case, property underappraised when appraiser simply omitted a parcel in the agreement.....and omitted two outbuildings.... though they were pointed out in person by agent on site....and omitted two fireplaces, and that wasn't everything they got wrong.  This by a long-time "experienced" appraiser.

Posted by Kris Collis, Associate Broker, Professional Results you Expect 702-574-8102 (Smart Way America Realty) 6 months ago

At one time, the appraiser clearly made a mistake and we fought it - and won. That was a good feeling. The other time, the appraiser was right and the FSBO seller had to lower the price quite a bit - they were reluctant, and a bit bitter, but that's what you get with you sell without professional representation.  Most agents, worth their salt,  will price a house pretty darn close to value. 

Posted by Debb Janes EcoBroker and Bernie Stea JD, REALTORS® in Clark County, WA (ViewHomes of Clark County - Nature As Neighbors) 6 months ago

Hi Margaret Rome, Baltimore Maryland sure the buyer can walk and the seller can baulk at the lower price or they can negotiate. Most negotiate. We have had some buyers come in with cash if appraisal come in lower than agreed upon sales price (to a reasonable point that is spelled out in a counter before appraisal is even done). This happens when an area is hot and or trending upwards in price fast. Many solutions in these situations.   I too have managed to get another appraisal done if I absolutley knew the appriasal was so off base with current market value.  Not easy to do but we have done it a couple of times. One time it took 3 of them.....long story.

Posted by Anna Banana Kruchten Broker, CRB, CRS, 602-380-4886 (HomeSmart International) 6 months ago

Anna Banana Kruchten - Phoenix Homes Sales Those are what we call nightmare appraisals and there are solutions, as in the example, you pointed out.

Posted by Margaret Rome Baltimore 410-530-2400, Sell Your Home With Margaret Rome ( HomeRome Realty 410-530-2400) 6 months ago