Appraised Value vs. Purchase Price
The appraised value is the independent estimate of a property's market worth as determined by a licensed appraiser. The purchase price is the amount the buyer and seller have agreed upon in the contract.
These two numbers do not always match. If the appraisal comes in at or above the purchase price, the transaction moves forward normally. If the appraisal comes in below the purchase price, the buyer, seller, or both may need to renegotiate or adjust the terms of the deal.
A low appraisal does not necessarily mean the deal is dead. It means the financing needs to be re-evaluated. Options may include renegotiating the price, the buyer covering the appraisal gap, or challenging the appraisal with additional comparable sales data. See what happens if your home appraises low.
Why This Matters: Understanding the difference between these two numbers prevents panic if the appraisal comes in low. Having a strategy in place before the appraisal is ordered puts you in a stronger position to negotiate.
Common question
What if the appraisal is lower than the purchase price?
You can renegotiate with the seller, bring more cash to close the gap, or in some cases walk away if you have an appraisal contingency. Your loan officer can outline your options.
Can I challenge a low appraisal?
In some cases, yes. Your lender may allow a reconsideration of value with additional comparable sales or other supporting data. Ask your loan officer about the process.
Related Mortgage Terms
Concerned about the gap between appraised value and your offer price? Let us help you think through your options.
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