An appraisal gap happens when a home appraises below the purchase price, leaving buyers to cover the difference in cash, renegotiate, or walk away. In 2021's bidding-war market, gaps of $30,000-$50,000 became common as offers outpaced what comparable sales data supported.
Why It Happens
Bidding wars push prices above market comparables. Appraisal reflects comparable reality.
Buyer overpays relative to market.
Buyer Options
- Make up gap in cash
- Renegotiate price down
- Walk away (if contingency in place)
- Challenge appraisal
None are perfect.
Frequency
30-40% of 2021 transactions had appraisal gaps.
Widespread issue in hot market.
Defense
Keep appraisal contingency. Don't waive protection.
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