So you found the home. You made the offer. The seller accepted. You're in escrow, feeling great — and then the appraisal comes back lower than the purchase price. It's one of those moments that can make your stomach drop.
If you're buying in Los Angeles, this scenario is more common than you might think. In competitive markets like Burbank, Pasadena, or Montebello, homes often sell above list price because multiple buyers are competing for the same property. When a home sells above what the appraiser determines it's worth, a low appraisal becomes a real possibility.
But here's what I want you to know: a low appraisal does not mean your deal is dead. You have options — and the right move depends on your loan type, your contract terms, and how much flexibility exists on both sides of the transaction.
Let me walk you through exactly what you can do next.
First, What Does a "Low Appraisal" Actually Mean?
When you're financing a home purchase, your lender will order an independent appraisal before approving your loan. The appraiser's job is to determine the fair market value of the property based on recent comparable sales, the condition of the home, and other factors.
If you agreed to purchase a home for $750,000 but the appraisal comes in at $715,000, your lender will only loan based on the appraised value — not the purchase price. That $35,000 gap is called the appraisal gap, and someone has to cover it.
As a buyer, you now have a few different paths forward.
Option 1: Renegotiate the Purchase Price
The most straightforward option is going back to the seller and asking them to reduce the price to match the appraised value. This is a legitimate negotiation — the appraisal is an independent assessment, and sellers who want to close the deal will often take it seriously.
In slower markets or with motivated sellers, this approach works well. In hotter neighborhoods like Eagle Rock, Alhambra, or parts of the San Gabriel Valley, sellers may be less willing to budge if they have other interested buyers waiting. But it's always worth having your agent open that conversation.
Option 2: Cover the Appraisal Gap Out of Pocket
If you have the cash reserves available and you really love the home, you can choose to pay the difference yourself. This means you're agreeing to pay more than the appraised value — essentially making up the gap between what the lender will finance and what the seller expects.
This is a financial decision that's worth thinking through carefully. I always encourage buyers to ask themselves: does this home genuinely justify the higher price? Is this a neighborhood where values are trending upward? Would you be comfortable knowing your equity position starts a little lower on day one?
There are no wrong answers, but you want to make that choice with clear eyes.
Option 3: Meet in the Middle
Sometimes the best outcome is a compromise. The seller comes down a bit, and you bring a little extra to the table to cover the remainder of the gap. This approach often appeals to sellers who are emotionally invested in getting close to their asking price, and it can save a deal that both sides want to close.
A good agent can help facilitate this conversation without putting either party on the defensive. The goal is to find a solution that makes sense for everyone.
Option 4: Request a Reconsideration of Value
If you believe the appraisal was inaccurate — perhaps the appraiser used comparable sales that weren't truly similar to your property, or missed recent sales that support a higher value — you can formally request a reconsideration of value (ROV) through your lender.
To do this, your agent will need to provide documentation: recent comparable sales that the appraiser may have overlooked, data about unique features that add value, or factual errors in the original report. This process takes time and isn't guaranteed to change the outcome, but if there's a genuine case to be made, it's worth pursuing.
This is one of the reasons having an experienced agent matters. I know how to pull the right comps, identify what may have been missed, and put together a compelling case on your behalf.
Option 5: Walk Away Using Your Appraisal Contingency
If you included an appraisal contingency in your offer — which is standard in most California purchase agreements — you have the contractual right to cancel the transaction and recover your earnest money deposit if the appraisal comes in low and the parties can't reach an agreement.
This is your safety net. It's one of the most important protections a buyer has, and it's a reason I strongly advise against waiving contingencies without fully understanding the risk you're taking on.
If you've reviewed all your options and the numbers simply don't work, walking away is a valid and financially responsible choice. The right home for you is still out there.
What to Do Before the Appraisal Comes In
The best time to prepare for a potential appraisal gap is before you make an offer. Here are a few things to keep in mind:
- Understand the local market. If homes in Glendale or West Covina are consistently selling above list price, there's a real chance the appraised value won't match your offer.
- Know your financial limits. Before you fall in love with a home, understand how much of a gap — if any — you could cover out of pocket.
- Keep your contingencies intact. Talk to your agent about the risks of waiving your appraisal contingency before you decide to do it.
- Work with an agent who knows the comps. The more informed your offer is going in, the less likely you are to end up in a difficult appraisal situation.
Low Appraisals Are Stressful — But They're Manageable
I've worked with buyers all across LA County, Orange County, and the Inland Empire, and I can tell you that a low appraisal, while stressful, is rarely the end of the road. Most of the time, there's a path forward — it just requires clear communication, a level head, and someone in your corner who knows how to navigate the negotiation.
If you're currently in escrow dealing with a low appraisal, or if you're just starting your home search and want to understand your protections as a buyer, I'm here to help.
Reach out to me directly: 📞 323-472-7059 🌐 homenest.house
Let's talk through your situation and figure out the smartest path forward — together.
Suzanna Saharyan is a Realtor with CENTURY 21 Realty Masters, serving buyers and sellers throughout Los Angeles County, Orange County, Riverside, San Bernardino, and Ventura County. She holds certifications in Short Sales & Foreclosures and Probate & Trust Real Estate.
