Your offer was accepted, the inspection went fine, and then the appraisal comes back below what you agreed to pay. It feels like the deal just died. It usually hasn't. But what happens next depends almost entirely on two things: your contract, and the people representing you.
First, what the appraisal is actually for
The appraisal is not for you. It's ordered by the lender, and its only job is to confirm the home is worth enough to secure the loan. If you stop paying and the lender has to sell it, they need to know the collateral covers the debt.
That's why the rule is simple and non-negotiable: the lender lends against the appraised value or the purchase price, whichever is lower. The seller can price the home at anything. The lender only finances what the appraiser says it's worth.
The appraisal gap
When the appraised value lands under the contract price, the difference is called the appraisal gap, and it becomes cash you have to cover on top of your down payment.
A $400,000 contract that appraises at $385,000
The loan didn't shrink because you got less qualified. It shrank because the collateral is worth less than you agreed to pay. That $15,000 has to come from somewhere, and figuring out where is the whole conversation.
Your appraisal contingency is the thing protecting you
If your contract includes an appraisal contingency, a low appraisal lets you renegotiate or walk away with your earnest money deposit intact. Without it, backing out can mean forfeiting that deposit entirely. This is exactly why waiving contingencies to win a bidding war is a decision worth taking seriously.
Your five options
Nothing here is automatic. Every one of these is a negotiation, which is the point.
What you cannot do
You can't just order another appraisal you like better. On an FHA loan the appraisal attaches to the property for 120 days, so switching lenders doesn't reset it. On conventional loans a second appraisal is possible but requires real justification, not just an unwelcome number.
A bigger down payment doesn't erase the gap. The lender is still capped at the appraised value. More money down changes your loan-to-value, not the ceiling.
Why your team decides how this goes
Two buyers can face the identical $15,000 gap and get completely different outcomes. The difference is rarely luck.
Your agent
Writes the contingency that protects you in the first place, reads the seller's motivation, and negotiates the split. A strong agent has already pulled the comps and knows whether the appraisal is defensible or beatable.
Your lender
Tells you within hours what the gap actually does to your loan, whether your structure still works, and whether an ROV is realistic. A lender who knows the appraisal process can build the reconsideration package properly instead of just forwarding your complaint.
Speed matters
Appraisal contingencies run on tight deadlines. A team that responds the same day preserves your options. A team that takes a week can let your protection lapse while you wait.
Honesty matters more
Some deals shouldn't be saved. A team that tells you when to walk away, even though nobody gets paid on a deal that dies, is the team you want on the next one.
One thing to remember
A low appraisal is a negotiating event, not a verdict. The seller has just been told by an independent professional that their price is above market. That information works in your favor, if someone on your side knows how to use it.
The bottom line
A low appraisal creates a gap between what you agreed to pay and what the lender will finance. You have five real options: renegotiate, split it, cover it, dispute it, or walk. Which one you get depends on your contingency, the seller's motivation, and how fast and how well your team moves.
The best protection is set up long before the appraisal ever happens: the right contingency in your contract, honest numbers so you know your real limit, and people who tell you the truth when the news isn't good.
Facing an appraisal gap right now?
Send me the appraisal and the contract. I'll tell you exactly what your options are and what it does to your numbers.