What Happens If the Appraisal Comes In Low?

Why a Low Appraisal Matters in Florida

When you finance a Florida home purchase, your lender bases your loan amount on the appraised value — not the contract price. If the appraisal comes in below what you agreed to pay, there is a gap your lender will not cover. That gap must be resolved before the loan can close.

Example: You agreed to pay $420,000. The appraisal comes back at $400,000. Your lender will approve financing based on $400,000. If you are putting 20% down, your loan covers $320,000 — but the seller expects $420,000. You are now short $20,000 that you must cover from somewhere, unless the parties renegotiate.

Low appraisals are more common in rapidly appreciating markets — and Sarasota and Manatee Counties have seen significant price appreciation since 2020. Appraisers rely on recent closed sales (comparables), and in a fast-moving market those comps may lag current pricing by several weeks or months.

Option 1 — Renegotiate the Purchase Price

The most common outcome when a Florida appraisal comes in low is that the buyer and seller agree to reduce the purchase price to the appraised value. This keeps financing intact and avoids the need for additional cash from either party.

Sellers will sometimes resist, particularly if they have multiple interested parties or believe the appraisal is inaccurate. But in most cases, a reasonable seller understands that accepting a lower price is better than losing the deal and starting over — especially if the buyer obtained the appraisal after extensive marketing time.

Your agent plays a critical role here. Michael Renick has navigated dozens of low-appraisal negotiations in Sarasota and Manatee Counties and knows how to frame the conversation constructively and reach a resolution that keeps both parties at the table.

Option 2 — Pay the Appraisal Gap Out of Pocket

If you want the home and can afford the difference, you can choose to cover the appraisal gap with additional cash at closing. In competitive Florida markets, some buyers include an “appraisal gap coverage” clause in their original offer, committing to cover a gap up to a certain amount. This strengthens your offer in a multiple-bid situation.

Before committing to this path, run the numbers carefully. You will need to cover:

• Your original down payment
• Standard closing costs
• The full appraisal gap amount

This requires significantly more cash at closing. Confirm with your lender and financial advisor that this approach works within your overall budget.

Option 3 — Dispute the Appraisal (Reconsideration of Value)

Appraisals are professional opinions, not absolute facts — and appraisers can make errors in comparable selection, property adjustments, or market condition analysis. If you believe the appraisal is inaccurate, you or your lender can formally request a Reconsideration of Value (ROV).

To support an ROV, your agent should provide:

• Recent comparable sales that the appraiser did not use, ideally closer in time and location to the subject property
• Documentation of features that may have been undervalued (recent renovations, superior finishes, unique amenities)
• Evidence of pending sales at higher prices in the same neighborhood

ROV success is not guaranteed — appraisers are independent and under federal regulations cannot be pressured to change their value. But if the original appraisal used poor comps or missed significant property features, an ROV can succeed. The process typically takes 5–10 business days.

Option 4 — Cancel the Contract Using the Appraisal Contingency

If your contract includes an appraisal contingency (also called a financing contingency with appraisal protection), a low appraisal that cannot be resolved gives you the right to cancel the purchase and receive your full earnest money deposit back.

Florida’s standard FAR/BAR purchase contracts include financing contingency language that can protect you in a low-appraisal scenario — but only if:

• You included the contingency in your original offer (some competitive offers waive it)
• You exercise the cancellation right within the contingency period specified in the contract
• Your loan denial or inability to obtain financing at the appraised value is properly documented

Before canceling, consult your agent and review the contract carefully. The specific language matters.

What If I Waived the Appraisal Contingency?

In competitive Florida markets — particularly Sarasota‘s luxury coastal market — some buyers waive the appraisal contingency to make their offer more attractive to sellers. This is a legitimate strategy, but it comes with real risk: if the appraisal comes in low and you have waived this protection, you are legally obligated to proceed at the contract price or lose your earnest money deposit.

Only waive an appraisal contingency if you have the financial capacity and willingness to cover a potential gap, and you have analyzed the comparable sales to assess how likely a low appraisal is. This is a decision that deserves careful discussion with your agent and lender before the offer is submitted.

Can Switching Lenders Help After a Low Appraisal?

Theoretically, you can switch lenders and order a new appraisal through the new lender — and a different appraiser might reach a different conclusion. In practice, however, this strategy has several drawbacks:

• It significantly delays the closing timeline, which may frustrate the seller and create contract termination risk
• The new appraiser uses the same market data and will often reach a similar conclusion
• Switching lenders involves restarting the mortgage approval process, including new income verification and credit checks

This approach is usually only worth pursuing if you genuinely believe the original appraiser was poorly qualified or made clear factual errors, and the seller is willing to extend the closing deadline.

Questions Clients Actually Ask

What is a low appraisal and why does it happen in Florida?

A low appraisal occurs when a licensed appraiser determines the property is worth less than the agreed purchase price. In Florida’s strong market, this often happens when sale prices rise faster than the recent comparable sales an appraiser can use. Appraisers must rely on closed sales data — typically within the last 90–180 days — which can lag behind rapidly appreciating current prices.

Can I get my earnest money back if the appraisal is low?

Yes — if your contract includes a financing or appraisal contingency and you properly exercise it within the specified time period. Florida’s standard FAR/BAR contract includes financing contingency language that protects buyers if they cannot obtain a mortgage due to a low appraisal. However, if you waived the appraisal contingency in your offer, you may lose your deposit if you cancel. Review your contract with your agent before taking any action.

How do I challenge a low appraisal in Florida?

Submit a Reconsideration of Value (ROV) request through your lender. Include 3–5 recent comparable sales that support a higher value, along with specific features the appraiser may have underweighted. Your real estate agent should help compile this supporting data — it requires local market knowledge to select the most compelling comparables. The appraiser has full discretion to accept or reject the challenge, but a well-supported ROV can succeed.

Should I waive the appraisal contingency in a competitive offer?

Only if you have analyzed the market carefully and can financially absorb a gap. Before waiving, ask your agent to run comparables so you understand the realistic appraisal risk. If comps strongly support the purchase price, waiving carries less risk. If you are stretching to an aggressive price in a market where values are uncertain, waiving the contingency exposes your earnest money to significant risk.

How long does it take to resolve a low appraisal in Florida?

A renegotiation between buyer and seller can be resolved in 24–72 hours if both parties are motivated. A Reconsideration of Value typically takes 5–10 business days. Switching lenders and ordering a new appraisal can add 2–4 weeks to your timeline. Factor these timeframes into your closing date expectations — and communicate proactively with your seller to maintain goodwill during the process.