Most of the time, yes. Appraisals come in at or above the agreed purchase price in the large majority of home sales — Fannie Mae’s review of two decades of mortgage data put the figure above 90 percent in every year studied, reaching 96 percent in some years.1Fannie Mae. Contract Price Confirmation Bias So if you’re wondering whether appraisals usually come in at the asking price, the odds are in your favor. The question worth preparing for is the smaller share of deals where they don’t, because a low appraisal can force a renegotiation, extra cash at closing, or a canceled contract.
Why Appraisals Line Up With the Contract Price So Often
The contract price is itself a strong signal of market value. When a buyer and seller reach an agreement in an open market, that number reflects what a real participant is willing to pay right now. The appraiser’s task is to test whether recent sales data supports it, and most of the time the data does.1Fannie Mae. Contract Price Confirmation Bias
Appraisers are also required to review the purchase contract before finishing their report, and federal rules require the lender to share it with them. Knowing the target figure gives the appraiser a starting point to check against local comparable sales. Fannie Mae has described the tendency of the final opinion to settle near the contract price as “confirmation bias” in its own research.1Fannie Mae. Contract Price Confirmation Bias
That doesn’t mean the number is a rubber stamp. Federal law makes it illegal for the lender, agents, buyer, or seller to pressure an appraiser toward a target value, and the appraiser must reach an independent conclusion. Interested parties can, however, ask the appraiser to consider additional property information, provide further explanation, or correct factual errors.2Office of the Law Revision Counsel. 15 USC 1639e – Appraisal Independence Requirements
The valuation itself is built primarily through the sales comparison approach. The appraiser identifies recently sold homes similar to yours, then adjusts their sale prices for differences in square footage, bedroom count, lot size, condition, and location.3Fannie Mae. B4-1.3-07, Sales Comparison Approach Section of the Appraisal Report Fannie Mae guidelines call for comparable sales that closed within the last 12 months, though older sales are permitted in areas with limited activity if the appraiser explains why.4Fannie Mae. B4-1.3-08, Comparable Sales
When a Low Appraisal Is More Likely
The transactions where appraisals fall short cluster in a few recognizable conditions. If your purchase matches one of these, treat a low result as a real possibility rather than a rare event.
- Rapidly rising prices. In a fast-moving seller’s market, bidding wars push contract prices ahead of recorded sales. A spike from the last few weeks may not yet appear in the comps the appraiser has to work with.
- Limited comparable sales. A home that is unusual for its neighborhood — much larger, a different style, or on a much bigger lot — is harder to value because close matches don’t exist.
- Deferred maintenance. A failing roof, aging mechanical systems, or water damage found on inspection can pull the appraised value below what you agreed to pay.
- Weakening neighborhood trends. More foreclosures, longer days on market, or declining sale prices nearby create downward pressure on valuations.
- Inflated listing prices. In low-inventory markets, some sellers ask ambitious prices. A buyer willing to meet the ask does not guarantee the data will support it.
What Happens If the Appraisal Comes In Low
The lender will base your mortgage on the appraised value, not the contract price. If you agreed to pay $300,000 but the appraisal is $280,000, the loan is sized around $280,000 and there is a $20,000 gap somebody has to cover. You generally have four ways to respond.
- Pay the difference in cash. You bring extra money to closing to cover the gap, effectively increasing your down payment.
- Negotiate a price reduction. The seller agrees to lower the price to the appraised value, or somewhere between the two figures.
- Split the difference. Both sides move — the seller drops the price partway, and you cover the rest in cash.
- Walk away under the appraisal contingency. If your contract includes an appraisal contingency and neither side will bridge the gap, you can cancel and get your earnest money back.
An appraisal contingency is a standard clause in most residential purchase contracts and is what makes option four available. If you waived it to make a more competitive offer, you could lose your earnest money deposit or be forced to come up with the cash difference.
Some buyers in competitive markets include an appraisal gap clause instead, committing to cover a shortfall up to a specified dollar amount. A clause might promise to pay up to $15,000 above the appraised value, giving the seller confidence the deal will close while capping your extra cash exposure at a known number.
How to Challenge a Low Appraisal
If you believe the number is wrong, you can request a reconsideration of value (ROV) through your lender. The Consumer Financial Protection Bureau has confirmed that borrowers have the right to raise concerns about appraisal accuracy, and lenders must provide a clear process for doing so.5Consumer Financial Protection Bureau. Mortgage Borrowers Can Challenge Inaccurate Appraisals Through the Reconsideration of Value Process
Disagreement alone won’t work. Under Fannie Mae guidelines, the request has to identify specific unsupported, inaccurate, or deficient areas in the report. You can submit up to five additional comparable properties with source information such as MLS listing numbers, along with an explanation of why those sales support a higher value. Arguing that the appraisal doesn’t support your loan amount isn’t grounds — the challenge has to be about material issues with the appraisal itself.6Fannie Mae. Appraisal Quality Matters
Common grounds that succeed include factual errors such as wrong square footage or an incorrect bedroom count, better comparable sales the appraiser overlooked, or evidence of prohibited discriminatory practices. Your real estate agent can often help identify stronger comps. To do this well you need the full report, and you have the right to it: under the Equal Credit Opportunity Act, your lender must give you a copy of every appraisal connected to your application, promptly after it’s completed or at least three business days before closing, whichever comes first.7Consumer Financial Protection Bureau. Rules on Providing Appraisals and Other Valuations
What If the Appraisal Comes In High
A high appraisal is straightforward good news. The purchase price stays the same because the seller cannot demand more just because the appraisal is higher. You walk in with instant equity: the difference between what you paid and what the home is worth. Buy for $280,000, appraise at $300,000, and you start with roughly $20,000 in built-in equity before making a payment. That improves your loan-to-value ratio and can help you drop private mortgage insurance sooner or refinance on better terms later.
FHA and VA Loans Have Extra Protections
Government-backed loans add requirements that reduce a buyer’s exposure to a low result.
FHA appraisals check both market value and whether the home meets minimum standards for safety and habitability, including proper grading, adequate heating, functional roofing, and freedom from active termite infestation.8U.S. Department of Housing and Urban Development. 4150.2 Property Analysis Every FHA transaction also includes an amendatory clause that gives the buyer the right to walk away and get their earnest money back if the home appraises below the purchase price. Unlike a standard appraisal contingency, the amendatory clause cannot be waived.
VA loans include the Tidewater Initiative. If the VA appraiser suspects the home may not appraise at or above the contract price, they contact the designated point of contact before finalizing the report, giving the buyer’s side a chance to submit additional sales data. The appraiser cannot discuss the anticipated value during that exchange; the point is to make sure relevant market data has been considered.9VA Loan Guaranty Service. Quick Reference for Real Estate Professionals
When There’s No Appraisal at All
Not every mortgage requires a traditional appraisal. Fannie Mae’s Value Acceptance program uses property data and automated valuation models to confirm a home’s value without a full appraisal. As of early 2025, eligible purchase loans for primary residences and second homes can qualify at loan-to-value ratios up to 90 percent. A related option, Value Acceptance plus Property Data, sends a trained third-party data collector to inspect the property instead of ordering a full appraisal.10Fannie Mae. Fannie Mae Announces Changes to Appraisal Alternatives Requirements
You can’t request a waiver; the lender’s automated underwriting decides based on the property’s data history, your loan-to-value ratio, and other risk factors. If one is offered, remember that skipping the appraisal removes an independent check on whether you’re overpaying. In a cooling market, that check may be worth more than the fee it saves — appraisals for a standard single-family home generally run $300 to $600, disclosed on the loan estimate your lender provides after you apply.