Buying a home is a significant milestone, but one of the most common questions potential…
What happens if the home appraises for less than my offer price?
Finding out a home appraised for less than your offer price—a situation known as an appraisal gap—can be a stressful hurdle, but it doesn’t have to be a deal-breaker. In fact, roughly 8–10% of real estate transactions encounter this snag, and many still close successfully with the right strategy.
When this happens, lenders will only approve a loan based on the appraised value, not the higher purchase price. To move forward in the 2026 Kansas City market, you must bridge that gap using one of the following strategic paths.
5 Strategies to Handle a Low Appraisal
- Renegotiate the Purchase Price: Ask the seller to reduce the price to match the appraised value. Motivated sellers often agree rather than risking the deal falling through.
- Meet in the Middle: A common compromise is to “split the difference”. The buyer brings more cash to the table while the seller lowers the price.
- Cover the Gap with Cash: If you have the reserves, you can pay the difference out of pocket in addition to your original down payment.
- Adjust Your Loan Structure: You might shift a portion of your existing down payment to cover the gap. While this may trigger Private Mortgage Insurance (PMI), it can allow the deal to proceed.
- Challenge the Appraisal (ROV): If there are errors in the report, such as incorrect square footage, you can submit a Reconsideration of Value (ROV) request.
Why Low Appraisals Happen in 2026
In highly competitive markets like Overland Park and Lee’s Summit, several factors can cause an appraisal to lag behind offer prices:
- Intense Bidding Wars: Competition can push prices above what local comparable sales (“comps”) currently support.
- Rapid Market Shifts: Appraisers rely on past sales data, which may not reflect real-time price surges in hot KC neighborhoods.
- Financing Type: Certain programs, like VA Loans or FHA loans, have stricter property standards that can impact value.
Protecting Your Earnest Money
An appraisal contingency is a vital protection clause in your contract. If the home appraises low and you cannot reach an agreement with the seller, this clause allows you to walk away from the deal with your earnest money intact. If you are looking to tap into existing equity instead of buying, see our guide on Cash-Out Refinancing to learn how current values impact your loan.
Navigate the KC Market with Confidence
Don’t let a low appraisal derail your dream home. Our local Kansas City experts can help you review your report and find the best financing strategy to bridge the gap.
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