What Happens If The Appraised Value Comes In Too Low? A Homebuyer’s Guide

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Peter Thompson

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What Happens If The Appraised Value Comes In Too Low? A Homebuyer’s Guide

In today’s dynamic Quebec real estate market, a common concern among homebuyers is what happens when a property’s appraised value doesn’t match the agreed-upon purchase price. Let’s break down this crucial aspect of the home-buying process and explore your options.

Understanding Home Appraisals: The Basics

When buying a home with a mortgage, lenders require a professional home appraisal to determine the property’s fair market value. This protects both you and the lender from overpaying for a property.

  • Cost: Typically around $500
  • Purpose: Provides an unbiased assessment of the home’s value

💡 Pro Tip: Don’t confuse an appraisal with a home inspection—while both are important, they serve different purposes in your home-buying journey.

When Appraisals Come In Low: A Real Example

Here’s a scenario we recently encountered in the Quebec market:

  • A home listed at $500,000 received an offer of $600,000.
  • However, the bank’s appraisal came in at $550,000—creating a $50,000 gap between the offer and the appraised value.
  • This posed a challenge for both the buyer and the seller.

What Causes Low Appraisals?

Several factors can lead to a lower-than-expected appraisal:

  1. Rapid market price changes – When home prices rise too quickly, appraisals may lag.
  2. Limited comparable sales – A lack of recent, similar sales in the area can affect valuations.
  3. Unique property features – Uncommon designs, layouts, or upgrades may not be reflected in the comps.
  4. Property condition issues – Homes requiring major repairs may receive lower valuations.
  5. Overheated bidding wars – Multiple competitive offers can drive prices above appraised value.

Your Options When Facing a Low Appraisal

For Buyers:

  1. Increase Your Down Payment

    • Cover the difference between the appraised value and purchase price.
    • Example: In the $600,000 scenario, you’d need an extra $50,000.

  2. Renegotiate with the Seller

    • Request a price reduction to match the appraised value.
    • Consider splitting the difference with the seller.

  3. Challenge the Appraisal

    • Request a review or second appraisal if you believe it was inaccurate.
    • Provide additional comparable sales data to justify a higher valuation.

For Sellers:

  1. Adjust Your Price Expectations – Be open to revising your listing price.
  2. Work with Your Agent – Provide additional market data to support the original price.
  3. Consider Other Offers – If the deal falls through, explore backup buyers.

📍 Related: The Power of Pre-Approval: How to Make Getting a Mortgage Easy and Safe

Need Help Selling Your Home?

Every home has the right buyer—sometimes, it’s just about making the right adjustments.

If you have questions about why your home isn’t selling or want an expert’s opinion on market conditions in Quebec, reach out today!

📞 Call Peter Thompson: (438) 500-8344
📩 Email: peter@peterthompson.ca

🏡 About Peter Thompson

Peter Thompson is a Quebec real estate expert specializing in helping homeowners navigate complex market conditions. Contact him today for a personalized home sale strategy.

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