🏡 What Does It Mean When a Home Appraises At, Above, or Below Value?

If you’re buying or selling a home, one of the most nerve-wracking parts of the process can be the appraisal—especially if you’re using a loan. Recently, I had a buyer very concerned about the appraisal coming in low, and it inspired me to break this down for everyone.

Here’s what it actually means when a home appraises at, above, or below value—and how it affects both the buyer and the seller.

🔹 First, what is an appraisal?

An appraisal is a third-party opinion of a home’s value done by a licensed appraiser—usually required by the lender. It helps the bank determine how much they’re willing to lend on a property.

While real estate agents help guide price, we don’t control what the appraiser is going to say. Especially with unique or custom homes, there may be fewer comparable sales (“comps”) for the appraiser to use. In some cases, agents can help provide comps or local insight, but ultimately—it’s the appraiser’s call.

✅ Appraisal Comes In At Value

This is the best-case scenario for everyone.

• Buyer: Your loan amount stays the same. You move forward as planned.

• Seller: No need to renegotiate. The deal is solid.

🔺 Appraisal Comes In Above Value

Rare—but a great outcome for the buyer!

• Buyer: You’re buying a home for less than it’s worth. Instant equity!

• Seller: Congrats, your home is worth more than the sales price—but you’re still selling it for what was agreed.
  
  ⚠️ You can’t raise the price just because the appraisal came in high unless there’s a renegotiation (which is rare).

🔻 Appraisal Comes In Below Value

This is where things get tricky.

• Buyer: The bank won’t lend more than the appraised value. You either:

• Ask the seller to drop the price

• Pay the difference in cash

• Or cancel the deal

• Seller: You may have to lower your price to keep the deal together, or find another buyer willing to cover the gap.

💡 Does the loan type matter?

Yes—FHA and VA loans tend to have stricter guidelines:

• If the home appraises low on an FHA or VA loan, that value sticks for 4–6 months, which could impact future buyers using those same loan types.

• Conventional loans tend to offer a bit more flexibility in negotiations or even challenging the appraisal.

Final Thoughts:

Appraisals are a critical step—but not always predictable. As an agent, I do my best to price homes right and support appraisers with helpful data when needed, but the outcome is mostly out of our control.

Whether you’re buying or selling, the best approach is to understand the process and know your options if the number doesn’t come in as expected.

If you’re ever in this situation, I’m here to walk you through it step by step.