What to do if the appraisal comes in low in New Hampshire

What does a low appraisal mean for my loan?

The appraisal is the lender's independent opinion of the home's market value. Lenders base the loan on the lower of the purchase price and the appraised value. When the appraisal comes in below the price, the loan amount the lender will allow is based on that lower value, so the gap between the appraisal and the price has to be covered some other way.

It doesn't mean the home has a problem or that your loan is denied. It means the numbers need to be reworked before closing.

What are my options?

• Renegotiate the price. Your agent can share the appraisal with the seller and ask for a lower price. Sellers often agree, since the next buyer's lender may see the same value.
• Cover the gap. You can bring more cash to closing so the loan stays within the lender's limits.
• Meet in the middle. The seller lowers the price part of the way, and you cover the rest.
• Change the loan. A different program or loan structure may fit the new numbers. Tom can compare options across Elite Mortgage Group's lenders.
• Walk away. If your purchase and sale agreement has an appraisal or financing contingency and you're within its deadline, you may be able to cancel. Your agent and a New Hampshire real estate attorney can tell you what your contract allows.

Can I challenge the appraisal?

Yes, through a reconsideration of value. Fannie Mae, Freddie Mac and FHA now require lenders to have a process that lets you ask the appraiser to take another look when you believe the value is unsupported, the report has factual errors, or it reflects discrimination.

• Ask your loan officer for a copy of the appraisal and the lender's reconsideration request form.
• Check the facts: square footage, bedrooms and baths, lot size, garage, updates and condition.
• Work with your agent to find closed sales nearby that the appraiser may have missed. Closed sales count most; active listings and pending sales usually carry little weight.
• Submit it through the lender. You don't contact the appraiser directly.

Fannie Mae allows one borrower-initiated reconsideration per appraisal, so make it complete. The appraiser may change the value or keep it.

Does it work differently for FHA, VA and conventional loans?

• FHA and VA purchase contracts include an amendatory clause, often called the escape clause. If the appraisal comes in below the price, you aren't required to complete the purchase or lose your earnest moneyEarnest money A deposit you make when your offer is accepted to show the seller you're serious. It's usually credited toward your cash to close. See the full glossary×, though you can choose to go ahead.
• VA's Tidewater process gives an early warning. When a VA appraiser expects the value to come in below the price, the appraiser notifies the loan's point of contact before finishing the report, and there's a short window, generally two business days, to send closed sales that support the price.
• FHA added a borrower reconsideration of value process in 2024, similar to Fannie Mae's.
• Conventional loans rely on your purchase contract's contingencies, and Fannie Mae and Freddie Mac require the reconsideration process described above.

Program details are in the FHA guide and the VA guide.

How can I lower the odds of a low appraisal?

• Ask your agent for recent closed sales before you set your offer price, especially in a bidding situation.
• Keep the appraisal and financing contingency dates in mind. The closing timeline planner lays them out.
• Make sure the appraiser gets a list of updates, such as a new roof, heating system or kitchen, through your agent and the lender.
• Talk with Tom before you offer about how much cash you'd want available if the value comes in short.