You’ve got a buyer, a signed agreement, and everything seems to be moving along nicely—until the appraisal report drops. And just like that, the mood shifts. The appraisal comes in lower than the sale price, and now everyone’s scratching their heads asking, “What happens next?”
If your house doesn’t appraise for the agreed sale price, it doesn’t necessarily mean the deal’s dead in the water. But it does mean you’ve got some decisions to make—and fast.
At Bloom Homes, we’ve helped Ontario homeowners through just about every tricky selling scenario you can imagine, and this one comes up more often than you might think. Whether you’re the seller, the buyer, or somewhere in between, let’s break it all down so you know exactly what to expect—and what you can do about it.
First, Why Does the Appraisal Matter So Much?
When a buyer needs a mortgage, the bank isn’t just going to take their word for what the house is worth. The lender sends an appraiser to determine the fair market value of the home, based on similar properties recently sold in the area.
If the house appraises at or above the agreed price? Great—things move forward. But if the appraisal comes in lower than the offer price, there’s a problem.
That’s because lenders will only finance the home based on its appraised value—not the contract price. The buyer’s loan is now short by the amount of the difference.
Let’s say the agreed sale price is $700,000, but the home appraises at $660,000. That’s a $40,000 gap—and someone has to cover it.
So What Happens if the Appraisal Falls Short?
When the appraisal is low, there are several ways things could play out. It all depends on the buyer’s financial situation, how motivated everyone is to keep the deal alive, and how flexible both sides are.
Here are the most common outcomes:
1. The Buyer Covers the Difference in Cash
If the buyer really wants the property and has extra funds, they may choose to pay the difference out of pocket.
In our example, if the lender will only approve a mortgage for $660,000, the buyer would need to bring in the remaining $40,000 on top of their down payment.
This keeps the deal on track—but not every buyer has that kind of cash sitting around.
2. The Seller Lowers the Sale Price
Some sellers are willing to drop their price to match the appraised value just to keep the sale moving. If you’re not locked into a specific number and you want a clean closing, this can be the easiest fix.
Sure, you’re getting less than expected—but you’re also avoiding delays, relisting, and the risk of losing your buyer altogether.
3. Both Parties Meet in the Middle
Sometimes it makes sense to split the difference. The seller drops the price a bit, and the buyer kicks in the rest. This is common in competitive markets where both sides are motivated to make it work.
It’s not ideal for either party—but it’s a fair compromise that often gets the job done.
4. The Buyer Walks Away
Unfortunately, if no one’s willing to budge, the deal can fall apart. If the contract has a financing or appraisal contingency, the buyer can usually back out without losing their deposit.
And just like that, you’re back to square one.
5. The Buyer Challenges the Appraisal
This one’s a long shot, but it does happen. The buyer’s lender can request a review or second appraisal, especially if there are clear errors or missing data in the original report.
Still, it’s rare for appraisals to change significantly—so don’t pin all your hopes on this one.
Why Appraisals Come in Low
You might be wondering, Why did this happen in the first place? Great question. Here are some common reasons appraisals miss the mark:
- The sale price is too aggressive for the current market
- Lack of recent comparable sales in your neighbourhood
- Unique features or upgrades that don’t translate to appraised value
- Market conditions have cooled, and prices are adjusting
- The appraiser missed key comps or used poor data
Sometimes, it’s no one’s fault. Other times, the appraiser just didn’t have all the info.
Can You Avoid a Low Appraisal?
While you can’t control everything, there are a few things you can do as a seller to improve your odds:
- Prepare the property – Clean, declutter, and make it easy for the appraiser to do their job.
- Share your upgrades – Leave a list of renovations or repairs, including permits and receipts.
- Know your comps – Be ready to point out recent nearby sales that support your price.
- Work with experienced professionals – A solid agent or buyer can help manage expectations and prevent surprises.
And if you’re selling to a cash buyer? You might skip the appraisal entirely.
Want to Avoid This Altogether?
If the thought of jumping through hoops and praying the appraisal lines up stresses you out, there’s another way.
Sell your house without appraisals. No waiting on financing. No third-party opinions. Just a straight deal from someone ready to buy.
At Bloom Homes, we buy houses for cash in Ontario, and we don’t need an appraisal to make a fair offer. We look at the home’s condition, the market, and what it’ll take to move forward. Then we give you a no-obligation offer, close on your timeline, and skip the red tape.
Whether your house is pristine or needs work, whether it’s been sitting on the market or just listed yesterday—we’re here to make the process easy.
What to Do if You’re Dealing With a Low Appraisal Right Now
Let’s say you’re currently under contract and just got hit with a low appraisal. What now?
Step 1: Don’t Panic
Low appraisals are more common than most people think. It doesn’t mean your house isn’t valuable—it just means the appraiser didn’t see the same number you did.
Step 2: Talk to Your Agent
If you’re working with a real estate agent, they should be your first call. They can help you assess comps, talk to the buyer’s agent, and come up with a plan.
Step 3: Explore Your Options
Is the buyer willing to pay the difference? Would you consider lowering the price? Could a second appraisal help?
Don’t feel boxed into one solution. Explore a few paths and see which one makes the most sense for your goals.
Step 4: Keep Your Backup Options Open
If the deal falls apart, it’s not the end of the world. You can relist, adjust your strategy, or go a different route entirely—like working with a cash buyer.
Could Selling to a Cash Buyer Be the Better Move?
It depends on what matters most to you.
If you need:
- Certainty
- Speed
- No appraisals or inspections
- No repairs or prep
- Flexible closing dates
…then selling for cash might be the cleaner, simpler choice.
Cash offers often close in 7 to 14 days, and you don’t have to worry about buyer financing falling through or appraisals getting in the way. If the numbers make sense and the stress goes away, that’s a win.
Ready to see what your house might be worth today? Contact Bloom Homes and we’ll give you an honest, no-pressure offer. You’ve got nothing to lose—and a whole lot of peace of mind to gain.