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What Does an Appraisal Gap Mean for Homebuyers? | reAlpha Mortgage

July 30, 2025

8 minutes

What Does an Appraisal Gap Mean for Homebuyers? | reAlpha Mortgage

Buying a home is a big milestone, but when the appraisal comes in lower than your offer, it can throw a wrench in your plans. That’s called an appraisal gap, and it could leave you scrambling to come up with extra cash.

In this guide, we’ll break down what appraisal gaps are, why they happen, and how you can deal with them without derailing your dream of homeownership.

Key Takeaways:

  • An appraisal gap occurs when a home's appraised value exceeds your offer.
  • There are strategies to bridge the gap without losing the deal.
  • Understanding appraisal gaps can save you money and stress.
  • Preparation and expert advice make all the difference.

What Is an Appraisal Gap?

An appraisal gap happens when the home’s appraised value is less than what you offered to pay.

Example:

  • You agree to buy a home for $300,000.
  • The appraiser values it at $280,000.
  • That creates a $20,000 gap.

Since lenders base your loan on the lower amount, you’d either need to cover the $20,000 difference yourself or renegotiate with the seller.

Why Appraisal Gaps Are Happening More Often?

  • Competitive Markets: Buyers often offer above asking to beat multiple offers.
  • Rapid Appreciation: Home prices sometimes rise faster than comparable sales ("comps") can catch up.
  • Unique Properties: If your home is unlike anything nearby, finding "comps" is tricky.

How an Appraisal Gap Affects Your Mortgage?

  • Loan Amount: The lender may lower the loan amount based on the appraised value.
  • Down Payment: You might need to increase your down payment.
  • Loan Type: Some loans have stricter requirements around appraisal issues.

Pro Tip: Work with lenders and agents who understand creative solutions to appraisal challenges.

Ways to Handle an Appraisal Gap

  • Negotiate: Ask the seller to lower the price to match the appraisal.
  • Meet in the Middle: Split the gap with the seller.
  • Bring Extra Cash: Cover the difference with personal funds.
  • Challenge the Appraisal: Request a reconsideration if you believe it's flawed.
  • Use Appraisal Gap Coverage: Some buyers add this clause upfront in hot markets.

Actionable Tip: Before submitting an offer, discuss likely appraisal outcomes with your lender.

How Be My Neighbor and reAlpha help?

reAlpha Mortgage pairs you with expert mortgage advisors who help you strategize offers, plan finances, and navigate appraisal gaps confidently Meanwhile, reAlpha empowers you with commission-free buying support, making the process more affordable and less stressful.

Find the Perfect Mortgage for Your Dream Home with reAlpha Mortgage.

Compare options, calculate payments, and get expert guidance - all in one place.

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Conclusion: Appraisal Gaps Don't Have to Derail Your Dream

Here's how it works:

  • 25% rebate when you use a reAlpha agent
  • 50% when you bundle with a reAlpha Mortgage
  • 75% when you add a reAlpha Title partner

Ready to buy smarter and save big? Start your journey with reAlpha Mortgage.

Buying your dream home doesn’t have to drain your savings. With reAlpha Mortgage, you can unlock up to 75% of your buyer agent’s commission back - real cash that can cover

FAQs

What happens if the appraisal comes in low?

You may need to renegotiate the purchase price, bring extra cash to closing, or even walk away, depending on your contract.

Can I still get a mortgage if there's an appraisal gap?

Yes, but you might need to increase your down payment or adjust your loan structure.

Is an appraisal gap bad?

Not necessarily. It’s a challenge, but with the right strategy, you can still close the deal.

Should I offer appraisal gap coverage when bidding?

In hot markets, it can strengthen your offer. Talk to your lender and agent first.

How can reAlpha Mortgage help with appraisal gaps?

reAlpha Mortgage provides expert mortgage advice and personalized financial strategies - while helping you save thousands through up to 75% buyer commission rebates.

Compliance Disclosures

  • NMLS ID #1743790 (reAlpha Mortgage)
  • reAlpha Mortgage is a licensed mortgage broker. All loans are subject to underwriting approval; terms and conditions apply.
  • reAlpha provides commission-free real estate buying services but is not a mortgage lender or financial advisor. Always consult a qualified professional before making financial decisions.
  • This article is for educational purposes only and is not financial advice.
  • Rates, terms, and loan programs are subject to change without notice and may not be available in all areas.
  • Not affiliated with or endorsed by any government agency.
  • Equal Housing Opportunity.

Find the Perfect Mortgage for Your Dream Home with reAlpha Mortgage.

Compare options, calculate payments, and get expert guidance - all in one place.

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Article by

NK
Nathan Knottingham

Proudly serving as Head of Go-to-Market Strategy at reAlpha, focusing on holistic homeownership journeys.

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