What Happens If the Appraisal Comes in Low? California Buyer Options
A low appraisal doesn't have to kill your deal. Here are the real options you have when the lender's valuation comes in under your purchase price.
If you’re financing your purchase, your lender orders an independent appraisal — and won’t lend more than the property’s appraised value. When the appraisal comes in below your agreed purchase price, you have a gap to close, and several real ways to close it.
Your actual options
- Renegotiate the price downto the appraised value — sellers facing a below-value appraisal often agree, since the next buyer’s lender is likely to appraise similarly.
- Cover the gap in cash — pay the difference between the appraised value and the purchase price yourself, keeping the loan amount tied to the appraisal.
- Split the difference with the seller — a common middle-ground negotiation.
- Cancel under your appraisal contingency (if you have one and haven’t already removed it) and get your deposit back.
- Challenge the valuation — request your lender submit a reconsideration of value with additional comparable sales, though the lender controls whether to act on it.
If you waived the appraisal contingency
Some buyers waive the appraisal contingency to strengthen a competitive offer — sometimes alongside an explicit “appraisal gap” commitment, agreeing upfront to cover a stated amount over the appraised value in cash. Waiving it means a low appraisal no longer gives you a contractual exit; you’d need to cover the gap or negotiate directly with the seller to avoid a breach.
Cash buyers
A cash purchase has no lender-required appraisal at all, so a low third-party valuation (if you order one anyway, for your own peace of mind) has no automatic effect on the contract — any price adjustment would purely be a matter of negotiation with the seller.
Frequently asked
Does a low appraisal automatically cancel my contract?
No. It only gives you a contractual right to cancel if you still have an active appraisal contingency — otherwise, it's a negotiation with the seller, not an automatic exit.
Can I get a second appraisal?
You can ask your lender to submit a reconsideration of value with additional comparable sales, but the lender decides whether to pursue it — there's no independent right to force a new appraisal.
What's an appraisal gap guarantee?
A clause some buyers add to a competitive offer, committing upfront to cover a stated amount of any shortfall between the appraised value and the purchase price in cash.
This is educational guidance, not legal advice. Consult a California real estate attorney for legal questions specific to your transaction.