How Often Do Home Appraisals Come in Low? Here Are the Odds
When people buy or sell a home, they often wonder about the likelihood of the home appraising at the expected value. While the answer varies depending on factors like accurate pricing and the speed of rising property values in the area, broader market data provides helpful context. According to research in 2017 by Fannie Mae, in a balanced market, approximately 8% of home appraisals come in below the contract price, though this percentage can shift with changing market conditions.
Low appraisals are more likely in markets where bidding wars are more common, where prices are rising quickly, or when there are a lack of available comps, according to Fannie Mae.
If your home doesn’t appraise at the agreed-upon contract price, it could delay your sale, cost you money, or even derail the deal entirely. A National Association of Realtors (NAR) survey from September 2024 found that appraisal-related issues were responsible for 6% of recent sales contract delays.
The odds of your appraisal coming in low depends on many factors, including your market’s current conditions. Jolene Jacobs, a top real estate agent who sells homes 55% faster than her market average, shares that low appraisals are becoming less common in her market in Royal Oaks, Michigan: “There’s been a couple here and there. Appraisals are not necessarily an issue right now. But I will tell you, earlier in the year, there were issues.”
We’ll dig into some of the reasons why your appraisal could come in low with insight from five real estate experts. Here’s a sneak peak at what’s ahead:
- How market conditions may increase the odds of a low appraisal
- What other factors can lead to a low appraisal?
- Steps to challenge a low appraisal when appropriate
- Your options if you can’t challenge the appraisal
- When to negotiate an appraisal gap guarantee
- Key takeaways
