What happens if the appraised value of a house is lower than the offer? Would the seller have to lower their price or would the buyer have to pay more?
When a home appraises for less than the agreed‑upon purchase price, it creates one of those “everyone take a breath” moments in a transaction. It doesn’t automatically kill the deal, but it does force some decisions.
Here’s the simple version. Lenders will only lend based on the appraised value, not the offer price. So if the appraisal comes in low, there’s suddenly a gap that has to be bridged somehow.
What happens next depends entirely on the Purchase & Sale Agreement and the type of buyer:
If there’s a mortgage contingency
The buyer is protected. They’re not required to move forward if the home doesn’t appraise. At that point, the buyer and seller usually renegotiate. The seller can lower the price, the buyer can bring extra cash, or they can meet somewhere in the middle. If no agreement is reached, the buyer can walk away with their deposit.
If the buyer wants the house enough to cover the gap
Some buyers choose to pay the difference out of pocket. For example, if the home appraises at $480k but the offer was $500k, the buyer might bring that extra $20k in cash. This is common in competitive markets where buyers are trying to win bidding wars.
If it’s a cash buyer
They’re not bound by lender rules, so they can decide whether the property is still worth the agreed price. They can renegotiate, move forward anyway, or walk away depending on the terms of the contract.
So no, the seller isn’t automatically required to lower the price, and the buyer isn’t automatically required to pay more. It all comes down to the contract, the buyer’s financing, and how motivated each side is to keep the deal alive.