If you’re financing a home, the appraisal is one of the most important — and most nerve-wracking — steps. Here’s what it is and what happens when it doesn’t go as planned.
What an appraisal is
An appraisal is an independent, licensed opinion of a home’s market value, ordered by your lender. The lender wants to confirm the home is worth what they’re lending against — they’re protecting their collateral. The appraiser compares the home to recent nearby sales (comps), condition, and features.
Why it matters to you
Your loan is based on the lower of the purchase price or the appraised value. So if the appraisal comes in at or above your contract price, you’re fine. If it comes in below, you’ve got a gap to solve — because the lender will only lend against the lower number.
What happens if it comes in low
You generally have a few options:
- Negotiate the price down to the appraised value.
- Bring extra cash to cover the gap (you pay the difference out of pocket).
- Split the difference with the seller somewhere in the middle.
- Dispute the appraisal with supporting comps (sometimes works, often doesn’t).
- Walk away if your contract protects you (an appraisal contingency or your option period).
Which path makes sense depends on the market, how much you want the home, and your contract terms.
For sellers
A low appraisal can stall your deal even with a willing buyer. Pricing in line with real comps from the start reduces the risk. (See How to Price Your DFW Home.)
How it fits the process
The appraisal happens during loan processing, after your option period (see the Texas home-buying timeline). It’s separate from your home inspection — the inspection is about condition; the appraisal is about value.
Want help thinking through an appraisal situation on a DFW home? Reach out.
General educational information, not financial or appraisal advice. Process and options vary by lender, contract, and market. Confirm specifics with your lender and agent.