🚨 Agent Did WHAT?!
“But It Appraised Low… We want to buy the OTHER house?”
🚀 The Scenario
A buyer offers $465,000 on a home listed at $450,000 in a competitive situation.
The buyer’s agent reassures the buyer:
“Don’t worry if the appraisal comes in low. The appraisal contingency protects you as a loophole in need be.”
The offer is accepted and the transaction moves forward.
Two weeks later the lender’s appraisal comes back at $445,000.
The buyer immediately tells their agent:
“Great, we’ll just walk away, I really liked that other house that just came on the market yesterday.”
But the seller responds differently.
Within a few days, the seller delivers an amendment reducing the purchase price to $445,000, the appraised value.
The buyer is shocked.
They assumed a low appraisal meant they could cancel the contract.
Now the buyer is under contract to proceed with the purchase unless another contingency applies.
The buyer asks their agent:
“Why didn’t you tell us this could happen? We wanted the OTHER house!”
🧠 Broker Guidance
The updated SCR Form 310 (03/2026) appraisal language changed how appraisal disputes are handled.
If the property appraises below the contract price, the seller has the ability to reduce the purchase price to the appraised value and keep the transaction moving forward.
The contract states that if the seller delivers notice of an amendment reducing the purchase price to the appraised value within the specified timeframe, the parties agree to proceed to closing under the amended price.
Only if the seller refuses to reduce the price does the buyer gain the option to terminate the contract under the appraisal contingency.
This means a low appraisal does not automatically give the buyer the right to walk away from the contract.
✅ What Agents Should Do
When discussing appraisal contingencies with buyers, agents should explain:
✔ A low appraisal does not automatically cancel the contract
✔ The seller may reduce the price to the appraised value and continue the deal
✔ The buyer may still be obligated to proceed with the purchase
✔ Other contingencies (financing, due diligence, etc.) may still apply depending on timing
Setting expectations early helps avoid surprises later in the transaction.
⚠️ Broker Tip
Many buyers assume that a low appraisal allows them to renegotiate or terminate the contract.
Under the updated contract language, the seller now has the first opportunity to resolve the issue by reducing the price.
Agents should avoid telling buyers:
“If it appraises low, you can just walk.”
Instead explain that a low appraisal typically leads to one of three outcomes:
- Seller reduces the price to the appraised value
- Buyer brings additional funds to closing
- The contract terminates only if the seller refuses to adjust the price.
Understanding this distinction will help prevent confusion and disputes when appraisal results come in.
