What Happens If Your Home Doesn't Appraise? (A Rhode Island Buyer's Guide to Your Options)

by David Cherry

You found the perfect house. Your offer was accepted. Financing is lined up. Everything's moving forward—until your lender calls with news that stops you in your tracks: "The appraisal came in low."

It's one of the most stressful moments in the home buying process, and in Rhode Island and Southern Massachusetts, it's happening more often as market conditions shift. Prices have been strong, but inventory is slightly up and some properties are sitting longer. That creates the perfect storm for appraisal gaps.

Here's what's actually happening, what it means for your deal, and—most importantly—what you can do about it.

What Does It Mean When a Home "Doesn't Appraise"?

When you apply for a mortgage, your lender hires an independent appraiser to determine the home's current market value. The lender uses this appraisal to decide how much they're willing to loan you.

Here's the problem: If the appraised value comes in lower than your agreed purchase price, your lender won't loan you the full amount you need.

Real-world example:
You offer $425,000 for a home in Warwick, RI. You're putting 10% down ($42,500) and financing $382,500.

But the appraisal comes back at $410,000.

Your lender will only loan you based on the appraised value—so instead of financing $382,500, they'll only approve $369,000 (90% of $410,000).

That leaves you with a $13,500 gap between what the lender will give you and what you need to close the deal.

Now what?

Why Do Appraisals Come in Low?

Appraisers base their valuations on recent comparable sales (comps)—similar homes that have sold nearby in the past 3–6 months.

In Rhode Island and Southern Massachusetts, appraisal issues often happen when:

The market is moving quickly. Sales from 3–6 months ago may not reflect what buyers are willing to pay today.
The home is unique. Appraisers struggle to find true comps for properties with unusual features, locations, or layouts.
There's been a bidding war. Emotional buyers push the price above what the data supports.
The seller overpriced and you overpaid. Sometimes the appraisal is actually accurate, and the agreed price just doesn't match reality.

According to the National Association of Realtors, about 10–15% of transactions face appraisal challenges in shifting markets—and that number is higher in areas where inventory is rising and buyer urgency is cooling.

Your Options When the Appraisal Comes in Low

You're not stuck. Here are the five most common ways buyers and sellers resolve appraisal gaps in Rhode Island and Massachusetts:

Option 1: Negotiate the Price Down

This is the cleanest solution—and often the fairest.

If the appraisal says the home is worth $410,000 but you agreed to pay $425,000, you (or your agent) can go back to the seller and say, "The appraisal came in at $410,000. Can we adjust the price to match?"

When this works:

The seller is motivated and wants the deal to close
The market has cooled and the seller knows other buyers may face the same issue
You have an appraisal contingency in your contract (most do)

Real-world example:
A buyer in Cranston offered $475,000 on a home. The appraisal came back at $460,000. The seller agreed to drop the price to $462,500 (splitting the difference). Everyone moved forward, and the deal closed.

Option 2: Bring More Cash to Closing

If you have the financial resources and you truly love the home, you can cover the gap yourself.

Using the Warwick example above, you'd need to bring an extra $13,500 in cash to closing on top of your original down payment and closing costs.

When this works:

You have extra savings and the home is worth it to you
The appraisal gap is small (a few thousand dollars)
You're confident the home will appreciate and you'll recoup the difference

The risk: You're paying more than the bank thinks the home is worth. If you need to sell in the next few years and the market softens, you might not get your money back.

Option 3: Ask the Seller to Cover Part of the Gap

Instead of asking the seller to drop the price or covering the full gap yourself, you can meet in the middle.

Example:
Appraisal gap is $15,000. You offer to bring an extra $7,500, and ask the seller to reduce the price by $7,500.

When this works:

Both parties want the deal to close
The gap is manageable but too large for one side to absorb alone
You have a good relationship with the seller and can negotiate collaboratively

Option 4: Challenge the Appraisal

If you believe the appraisal is inaccurate, you can ask your lender to request a reconsideration of value (ROV).

This involves providing additional comparable sales data that the appraiser may have missed—especially recent sales or pending deals that support your purchase price.

When this works:

The appraiser used outdated or irrelevant comps
There are recent sales in the neighborhood that weren't included
Your agent has strong local market knowledge and can provide data

The reality: This rarely changes the outcome significantly, but it's worth trying if the appraisal feels clearly off. Your lender will need to submit the request on your behalf.

Option 5: Walk Away

If you have an appraisal contingency in your contract (most financing offers do), you can walk away and get your earnest money deposit back if the appraisal comes in low.

When this makes sense:

The gap is large and you can't (or don't want to) cover it
The seller refuses to negotiate
You're uncomfortable paying more than the appraised value
You've found red flags about the home or neighborhood during the process

Walking away is hard emotionally, but sometimes it's the smartest financial decision—especially if the appraisal is telling you something important about the home's true value.

How to Avoid Appraisal Issues in the First Place

While you can't control the appraiser, you can reduce your risk:

✅ Work with an experienced agent who knows local comps. They can help you make an offer that's competitive but supported by data.

✅ Don't waive your appraisal contingency unless you're prepared to cover any gap out of pocket.

✅ Ask your agent to share recent comps with the appraiser. While appraisers do their own research, providing a list of strong comps upfront can help.

✅ Be realistic about the market. If homes in the area are sitting longer or reducing prices, recognize that the appraisal may not support inflated offers.

✅ Get pre-approved early and work with a responsive lender. A good lender can flag potential appraisal concerns before you even make an offer.

Final Thought

An appraisal gap doesn't have to kill your deal—but it does require clear communication, flexibility, and sometimes tough decisions.

The most important thing to remember: the appraisal is an independent assessment of value. If it comes in low, take it seriously. It might be protecting you from overpaying, or it might just be conservative. Either way, you have options.

If you're buying a home in Rhode Island or Southern Massachusetts and want to talk through appraisal risks, negotiation strategies, or how to structure an offer that minimizes your exposure, I'm happy to walk you through it. Sometimes just knowing what to expect—and having a plan—makes all the difference.

Written by: David Cherry
Licensed in RI & MA | Preparing you for what's coming, not just what you hope for