Blog > Low Appraisal in Texas? Your Options as a Houston Buyer or Seller
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The short answer
- When an appraisal comes in below the contract price, there are four main paths: lower the price, split the gap, have the buyer cover it in cash, or challenge the value.
- In Texas, what the buyer can do depends on the appraisal addendum in the contract, which can keep, partially waive or fully waive their right to walk away.
- A reconsideration of value works best when the appraiser missed closer, newer or more similar sales.
- The best fix is prevention: give the appraiser the updates, records and comparable sales that support the price.
Few things stall a deal like a low appraisal. Everyone agreed on a price, the inspection is behind you, and then a number comes back from the lender's appraiser that's $5,000 or $15,000 short. With prices flat and rates above 7% this fall, I'm seeing more appraisals land right at or just under contract prices, especially on homes that were priced off last spring's highs.
Here's how low appraisals work in Texas and how we handle them for both sides.
Why the appraisal matters
A lender bases your loan on the lower of the purchase price or the appraised value. If a home is under contract for $425,000 and appraises at $415,000, a buyer putting 10% down would have their loan based on $415,000, so someone has to make up the $10,000 difference: the seller through a lower price, the buyer through extra cash, or both.
What the Texas contract says
Texas uses an Addendum Concerning Right to Terminate Due to Lender's Appraisal. When it's part of the contract, the buyer chooses one of three positions:
| Choice in the addendum | What it means if the appraisal is low |
|---|---|
| Waiver | The buyer gives up the right to terminate over a low appraisal and must bring the difference or renegotiate. |
| Partial waiver | The buyer agrees to cover the gap up to a set amount. Beyond that, they can terminate within the stated time. |
| Additional right to terminate | The buyer can terminate if the appraisal comes in below a set value, usually the price, and get their earnest money back. |
Without that addendum, the financing addendum still matters, because a loan that isn't approved on the property can end the contract. That's why we read every appraisal clause before an offer is signed, on both sides.
Your four options when the value comes in short
- The seller lowers the price to the appraised value. The simplest fix, and often the right one if the appraiser's comparable sales are solid.
- Split the difference. The seller reduces the price partway and the buyer brings the rest in cash.
- The buyer covers the gap. Common when the buyer has cash and really wants the house, or when they waived the appraisal contingency to win the deal.
- Challenge the value. The buyer's lender can submit a reconsideration of value with better comparable sales. It usually takes a few business days and works best when the appraiser missed closer, newer or more similar sales, or got a fact wrong, like the square footage or the number of bathrooms.
On VA loans, the appraiser contacts the agents before finalizing a low value and gives them a short window to send additional sales. On FHA loans, the appraisal typically stays with the property for a period of time, so a low FHA value can follow the home to the next FHA buyer, which is one more reason to get the value right the first time.
Real examples from our sales
Near Northside (77009), 2018 home. The home appraised at $421,500 against a $425,000 price, and the buyer still had a home to sell. We gave the sellers two clear paths: wait for the buyer's sale and keep their net, or let the buyer close sooner using family gift funds at $3,500 less. The sellers matched the appraised value and closed in December 2024.
Near Northside (77009), 1910 bungalow. Before the appraisal, we briefed the appraiser that three full bathrooms is rare for bungalows in that area and handed over paid invoices for the HVAC, termite and foundation work. It appraised at contract value and the sale closed.
Atascocita (77346), 1978 home. An older home only appraises fairly if the appraiser knows what's been updated. We sent a dated list: 2025 paint and carpet, 2022 kitchen, bath and flooring, a 2021 HVAC system and a 2015 roof.
How we prepare the appraiser (without crossing the line)
Appraisers are independent, and agents can't pressure them. What we can do is make sure they have the facts:
- A one-page list of updates with dates and costs, especially roof, HVAC, foundation, plumbing, kitchens and baths
- The comparable sales we used to price the home, with notes on why they're the best matches
- Features that don't show up in public records, such as a permitted addition, a third full bath or a bigger lot than the neighbors
- Easy access to the home, with every room, the attic and the garage open
Appraisal-required repairs
Sometimes the issue isn't the value but the condition. FHA and VA appraisers can require repairs before the loan closes. On one of our recent purchases in Cypress, the appraiser required flooring work. We coordinated with the seller to finish it, got the lender to schedule the re-inspection right away and kept the closing on track.
If you're the seller: should you just lower the price?
Ask three questions first. Are the appraiser's comparable sales really the best matches? Would the next buyer's appraiser likely say the same thing? And what would a relisting cost you in time, carrying costs and leverage? In a flat market, a second appraisal often lands in the same place. We lay out each path on your net sheet so the decision is clear.
Appraisal questions
What happens if the appraisal comes in low in Texas?
The seller can lower the price, the parties can split the difference, the buyer can pay the gap in cash or the buyer's lender can request a reconsideration of value. The buyer's right to terminate depends on the appraisal addendum in the contract.
Can a buyer back out of a Texas contract over a low appraisal?
It depends on the contract. If the buyer kept the right to terminate in the appraisal addendum, they can terminate within the stated time and get their earnest money back. If they waived it, they generally can't.
Can you challenge a low appraisal?
Yes. The buyer's lender can submit a reconsideration of value with better comparable sales or corrected facts. It works best when the appraiser missed closer, newer or more similar sales.
Who pays the difference when an appraisal is low?
It's negotiated. The seller may lower the price, the buyer may bring extra cash, or they split the difference.
How can a seller avoid a low appraisal?
Price from recent comparable sales, and give the appraiser a dated list of updates, records of major repairs and the comparable sales that support the price.
Dealing with an appraisal right now, or about to list? We'll review the comparable sales and help you choose the best path. Call or text (832) 777-3904 or send me a note.
Sources
- TREC: Addendum Concerning Right to Terminate Due to Lender's Appraisal
- TREC: One to Four Family Residential Contract (Resale)
- Compean Group transaction records, 2024 to 2026 (client names and addresses removed)
