10 Nov What a Low Appraisal Means for a Pennsylvania Seller
A low appraisal means the buyer’s lender values your house below the price you agreed on. With Fannie Mae, FHA and VA loans, the loan is figured on the lower number, so the gap has to be closed some other way: you lower the price, the buyer brings more cash, you meet in the middle, the buyer asks for a reconsideration, or the sale ends if the agreement, including any clause an FHA or VA loan requires, lets the buyer walk away.
Each one takes a decision by you, the buyer or both. Here’s how each one works, what you can and can’t do as the seller, and how to prepare before you sign.
Why does a low appraisal matter to the seller?
Because the buyer’s loan is sized from it. For a conventional loan sold to Fannie Mae, the loan-to-value ratio on a purchase is figured on “the lower of the sales price or the current appraised value.” A VA loan is capped at the lesser of the agreed price or the reasonable value VA sets. For FHA loans, HUD says the appraised value is used to determine the maximum mortgage it will insure.
So for these loans, when the appraisal comes in below your price, the lender won’t lend as if the house were worth the price. The difference has to come from somewhere, and that’s the conversation you and the buyer have next.
Can the buyer walk away after a low appraisal?
It depends on the agreement of sale and the buyer’s loan.
- Your agreement of sale. Pennsylvania’s real estate licensing rules require an agreement that depends on the buyer getting a mortgage to state the mortgage terms: the type, the amount, the maximum interest rate, the minimum term, the deadline, and the help the broker will give. They don’t require an appraisal clause. Whether your agreement has one, and what it says, is negotiated.
- FHA loans. If the buyer signs before receiving the FHA appraised value, the contract needs HUD’s “amendatory clause.” It says the buyer doesn’t have to complete the purchase, or lose the earnest money, if the appraised value comes in below the price. The buyer can also choose to go ahead anyway. HUD exempts some sales, including FHA 203(k) renovation loans and certain sales by lenders, Fannie Mae, Freddie Mac and government agencies.
- VA loans. If the veteran signs before receiving VA’s notice of value, the contract needs VA’s “escape clause.” If the price is more than VA’s reasonable value, the buyer can negotiate, go ahead by paying the difference in cash from their own funds, or exit without losing the earnest money. VA says the clause can’t be used to cancel the contract for any other reason.
If the sale ends and the buyer and seller disagree about the deposit, Pennsylvania’s rules have the broker holding it keep it in escrow until the dispute is resolved. If the dispute looks unlikely to be settled without legal action, the broker can, after giving both parties 30 days’ notice, ask the county court to decide. Who’s entitled to the deposit depends on your agreement.
What are your options as the seller?
1. Lower the price to the appraised value. The loan works as planned, and you give up the difference.
2. Keep the price, and the buyer covers the gap. The loan is figured on the appraised value, so the buyer has to make up the difference. How much extra cash that takes depends on the buyer’s loan and down payment; on a VA loan, the veteran pays the full difference in cash from their own funds. This works only if the buyer can cover it and still wants the house at that price.
3. Meet in the middle. You lower the price part of the way, and the buyer covers the rest.
4. Support a reconsideration of value. This is a request for the appraiser to look again. Fannie Mae requires lenders to offer borrowers a way to ask for one when they believe the value is unsupported, may be deficient, or reflects prohibited discrimination. The buyer asks through the lender, once per appraisal, with up to five other comparable sales; the appraiser responds, and the lender decides whether to accept the appraiser’s conclusion. Fannie Mae’s process is for the buyer to start, though a lender’s own practices may let someone else ask. VA says a VA buyer can also request one. FHA dropped its buyer-initiated version in March 2025; on an FHA loan, the lender’s underwriter decides whether to ask the appraiser to reconsider. Either way, you and your agent can give the buyer’s agent recent sales that support your price.
5. Let the sale go, if the agreement allows the buyer out and you’d rather market the house again.
Whatever you and the buyer agree, put it in writing, signed by both of you.
What does that look like on a $400,000 sale?
Here’s an example. The price is only an example, not a prediction for any home.
Example: a house in Bridgeport, Montgomery County, under agreement at $400,000, with the transfer tax split evenly. The buyer’s appraisal comes in $15,000 lower, at $385,000.
| Option | Price | Your share of the 2% transfer tax |
|---|---|---|
| No change (the buyer covers the $15,000 gap) | $400,000 | $4,000 |
| Lower the price to the appraisal | $385,000 | $3,850 |
| Meet in the middle ($7,500 each) | $392,500 | $3,925 |
Lowering the price by $15,000 cuts your proceeds by $15,000, less the $150 you save on your share of the transfer tax ($15,000 × 2% ÷ 2), and less anything else in your agreements that’s figured on the price. Your mortgage payoff doesn’t change. For the rest of the math, see How to Estimate Your Net Proceeds When You Sell in the Philadelphia Suburbs.
Can you or your agent talk to the appraiser?
Not to push for a number. Federal rules bar the lender and the people who provide services for the sale, including the real estate agents, from trying to influence the appraiser toward a value; asking an appraiser to hit a minimum value is one of the listed violations. The same rules allow asking the appraiser to consider more information about comparable sales, to explain how they reached the value, or to correct errors. These rules cover consumer loans secured by the buyer’s principal home.
Once the appraisal is done, a reconsideration request goes through the buyer’s lender. What your agent can do is give the buyer’s side a clear list of recent, comparable sales to support it.
Can you see the appraisal?
Not automatically. The lender has to give the buyer a copy of the appraisal promptly when it’s done, or three business days before closing, whichever comes first, and the buyer can waive that timing. Nothing in that rule gives the seller a copy. The buyer can share it, and if you’re negotiating over it, you’ll want to ask.
How can you prepare before you sign?
- Price from recent sales, not hope. A price backed by recent comparable sales gives the buyer something concrete to submit if they ask for a reconsideration of value.
- Know the buyer’s loan. An FHA or VA loan brings in the clauses above when the agreement is signed before the buyer has the appraised value. A buyer with more cash has more room to cover a gap.
- Read the appraisal and mortgage terms in your agreement, including the deadlines, before you sign.
- Plan for the timeline. We cover where the lender’s review, including the appraisal, falls between the offer and settlement in What Happens Between Accepting an Offer and Closing in Pennsylvania. For every cost on your side, see What It Costs to Sell a House in the Philadelphia Suburbs.
Frequently asked questions
Does a low appraisal mean I have to lower my price?
No. For Fannie Mae, FHA and VA loans, it means the buyer’s loan is figured on the lower value. You can lower the price, the buyer can cover the gap, you can meet in the middle, or, if the agreement lets the buyer out, the sale can end.
Can the buyer get a new appraisal?
Under Fannie Mae’s rules, not on request. The buyer can ask for one reconsideration of value per appraisal, with up to five other comparable sales. If the value doesn’t change, Fannie Mae says the buyer can’t then request a new appraisal; accepting the appraiser’s conclusion is the lender’s decision. VA says a VA buyer can also request a reconsideration. For FHA loans, HUD withdrew its buyer-initiated process in March 2025; the lender’s underwriter can ask the appraiser to reconsider if relevant information was missed.
Does every buyer’s loan need an appraisal?
No. A cash buyer has no lender appraisal, though they can still order one. For certain conventional loans, Fannie Mae’s automated system offers “value acceptance,” in which case no appraisal is required; it isn’t available for some loans, including two- to four-unit homes, a price or estimated value of $1,000,000 or more, and sales with a gift of equity.
What if the appraisal comes in above the price?
The price stays what you agreed to in the agreement of sale. For a conventional loan sold to Fannie Mae, the loan is still figured on the lower number, which in that case is the price.
Want a price backed by recent sales?
You can prepare for a low appraisal before you list, by pricing from recent sales you can show a buyer. If you’re thinking about selling in Philadelphia or the Philadelphia suburbs, we’ll show you the sales behind our numbers, and if an appraisal comes in low, we’ll walk you through your options. Any value range we give you is a broker price opinion, and a broker price opinion is not an appraisal. Contact Plus Realtors and tell us where your home is.