What do you do when the bank tells you your dream home isn’t worth what you agreed to pay? It happens more often than you’d think — and a low appraisal can kill a deal faster than anything else in real estate.

I’m Lisa Salt with RE/MAX Vernon Salt Fowler, and today I’m walking you through exactly what to do if you’re faced with a low appraisal. This is important whether you’re buying or selling a home.

What Is an Appraisal and Why It Matters

When you buy a home in Canada with mortgage financing, your lender wants to be sure the property is worth the amount you’re borrowing. That’s where the appraiser comes in.

The appraiser is an independent professional hired by the lender — not by you or the seller. Their job is to give an unbiased opinion of the home’s current market value based on several factors such as:

• Age and condition of the home
• Lot size and quality of construction
• Upgrades and renovations
• Zoning rules and location
• Recent sales of similar homes

Typically, the report is completed within a few days to a week after the appraiser visits the home. In some cases, like CMHC-insured mortgages, the process may take a little longer.

Here’s the key point: whatever number the appraiser lands on is what the bank bases its lending on. If that number is lower than your purchase price, the gap has to be dealt with somehow.

Why Do Appraisals Come In Low?

1. Fast-Moving Markets

When prices are rising quickly, appraisers rely on data from past sales. Those sales may already be outdated compared to today’s market, creating a gap between real-time pricing and comparable data.

2. Lack of Comparable Sales

If there aren’t enough similar homes sold nearby, the appraiser has to make adjustments — sometimes resulting in a lower valuation. This is especially common in Vernon, where many homes are unique.

3. Over-Renovated Homes

If the neighbourhood has mostly dated homes, recent sales may not reflect the value of a fully upgraded property. Even if buyers are willing to pay more, the appraisal might still come in low on paper.

4. Human Error

Appraisers are professionals, but mistakes can happen — missed details, weaker comparables, or calculation errors that can affect the final number.

Five Strategies to Handle a Low Appraisal

1. Cover the Difference in Cash

If you’re the buyer, you can bring in extra funds to make up the shortfall. For example, if you agreed to pay $700,000 and the appraisal came in at $680,000, you could pay the $20,000 gap in cash to keep the deal alive.

Not everyone can or wants to do this, but if you love the home or there are backup offers, the peace of mind may be worth more than the difference.

2. Negotiate a Price Reduction

For sellers, lowering the price can sometimes be the simplest and fastest solution. If one appraisal came in low, the next one might too. Reducing the price can close the deal faster and avoid wasted time on the market.

A seller’s flexibility often depends on how much activity their listing has. Multiple backup offers can make a seller more confident in holding firm, while a long time on market might encourage a reduction.

3. Dispute the Appraisal

Ask for a copy of the appraisal report and review it carefully. Did the appraiser miss upgrades, use poor comparables, or overlook a recent nearby sale? If errors exist, you can present the evidence to your lender.

Only the lender can order a second appraisal, but strong supporting documentation can make a difference.

4. Present Better Comparable Sales

This is where your realtor really shines. Realtors can compile comparable sales that better reflect current market conditions. Sometimes appraisers miss recent data, but your agent can highlight updated and relevant sales to the lender or underwriter.

5. Negotiate a Middle Ground

Buyers and sellers can meet halfway. If the appraisal is $20,000 short, the seller might drop $10,000 and the buyer adds $10,000 in cash. It’s a fair compromise that keeps the deal moving forward.

Final Thoughts

A low appraisal doesn’t have to end your real estate journey. With the right strategy, a skilled agent, and open communication, both buyers and sellers can find a solution that works.

Sometimes what feels like a deal breaker at first just becomes another bump in the road on the way to a successful sale.

Whether you’re buying or selling in Vernon and the Okanagan Shuswap, call, text, or email us at RE/MAX Vernon Salt Fowler — and just add Salt.

__________________________________

About the Author: The article above, Buyers & Sellers ALERT: How to Win When the Appraisal Comes in Short!, was provided by Lisa Salt, an authority on Vernon BC and area real estate and a leader in the field of real estate blogging and vlogging.  Lisa and her group have helped literally helped thousands of families buy and sell homes since 1993. 

Looking to buy a home in the Vernon/North Okanagan area?  Check out "Everything You Need to Know About Buying a Home" article. It’s free of charge and will save you a ton of time!

Looking to sell?  We use the latest technology to get our clients’ homes sold quickly and for as much money as possible.

We help people buy and sell real estate in the following Okanagan/Shuswap areas: Vernon, Armstrong, Enderby, Lake Country, Lumby, Westside and Salmon Arm/Shuswap.

Call or Text 250-549-7258 or email webinfo@saltfowler.com