In a typical year, roughly 7% to 9% of home appraisals come in below the contract price, according to Federal Housing Finance Agency data covering 2013 through 2020.1Federal Housing Finance Agency. Underutilization of Appraisal Time Adjustments That share climbed sharply in 2021 and 2022, when home prices ran ahead of the comparable sales appraisers rely on, and settled back toward historical norms by early 2023. So the short answer to how often home appraisals come in low is: usually fewer than one in ten, but the rate moves with the market, and it is not evenly distributed across neighborhoods.
Why Most Appraisals Match the Price
The Federal Reserve Bank of Philadelphia, analyzing millions of transactions, found that fewer than 10% of all appraisals fall below the contract price and roughly 30% land at the exact contract amount.2Federal Reserve Bank of Philadelphia. Appraising Home Purchase Appraisals Among loans that close and get purchased by Fannie Mae, the confirmation rate is even higher, between 94% and 97%.
Researchers have long called this pattern confirmation bias. The contract price is a visible data point, and when a willing buyer and willing seller reach it in an open market, it carries real weight as evidence of value. Appraisers still work from comparable sales, but the agreed number pulls results toward confirmation. When prices rise steadily and comparable sales keep pace, that pull produces accurate-looking appraisals. The gap opens when prices move faster than the recent sales data can follow.
When Low Appraisals Are More Likely
Low appraisals cluster in specific situations. Fast-rising markets with thin inventory are the most common. Bidding wars that push a contract well above recent transaction data create obvious risk. New construction in areas without many finished comparables produces gaps for the same reason. Rural properties and unusual homes face the problem from a different angle: with few similar recent sales nearby, the appraiser simply has less evidence to support the number on the contract.
The rate also varies sharply by neighborhood demographics. FHFA data shows appraisals fall below the contract price in 15.4% of transactions in predominantly Latino neighborhoods and 12.5% in predominantly Black neighborhoods, compared with 7.4% in predominantly white neighborhoods. That is roughly 1.5 to 2 times the baseline rate, using the same methodology and time period.
A separate Brookings Institution analysis measured something broader: homes of similar quality in neighborhoods with similar amenities are worth 23% less in majority-Black neighborhoods than in areas with very few Black residents, an average gap of $48,000 per home and an estimated $156 billion in cumulative losses nationwide.3Brookings Institution. The Devaluation of Assets in Black Neighborhoods That figure is a market-wide devaluation, not just a contract-versus-appraisal gap, and it feeds back into appraisals because appraisers use those same market transactions as comparables. Fair housing laws, including the Fair Housing Act and the Equal Credit Opportunity Act, prohibit discrimination in property valuations, and a borrower who believes bias affected an appraisal can file a complaint with the CFPB or HUD.
What a Low Appraisal Means for Your Loan
When an appraisal lands under the contract price, the lender bases the loan on the lower figure. On a $400,000 purchase where the appraisal comes in at $388,000, the lender treats the home as $388,000 of collateral. That $12,000 shortfall is the buyer’s to solve, either with more cash, a lower price, or a different outcome for the deal.
A low appraisal does not automatically kill a transaction. It forces a decision, and the strength of your position depends almost entirely on one clause in your contract.
Your Options After a Low Appraisal
An appraisal contingency lets you renegotiate or walk away if the appraised value falls short. If your contract has one, you can push the price down to the appraised value, meet the seller somewhere in between, or cancel the contract and get your earnest money back. Many sellers will negotiate rather than start over with a new buyer who may face the same result.
If you waived the contingency, the choices narrow. You can bring cash to cover the gap, try to talk the seller into a reduction anyway, or walk away and forfeit your earnest money. Waived contingencies became common in the overheated markets of 2021 and 2022, and the cost of that gamble became clear when appraisals didn’t keep up.
Challenging the Appraisal Itself
Whether or not you have a contingency, you can ask your lender to submit a reconsideration of value, a formal request that the appraiser revisit the report based on information it does not reflect. Only the lender can submit the request; you cannot contact the appraiser directly.4HelpWithMyBank.gov. What Is a Reconsideration of Value (ROV) and Who Can Request One The Consumer Financial Protection Bureau has said borrowers can point to factual errors, omissions, inadequate comparable properties, or evidence of prohibited bias as grounds.5Consumer Financial Protection Bureau. Mortgage Borrowers Can Challenge Inaccurate Appraisals Through the Reconsideration of Value Process
Set expectations honestly. No federal agency publishes reliable success-rate statistics for these requests, and figures sometimes cited in the industry lack a verifiable government source. What is well-established is that most requests fail when they lack new, verifiable comparable sales. A letter that argues the house is simply worth more, without identifying specific recent sales the appraiser missed or correcting a factual error, will almost certainly go nowhere. The strongest requests identify comparable sales that closed after the appraisal was ordered, correct square footage or feature errors, or flag comps the appraiser used that are clearly inferior matches.
One recent change to be aware of: in 2025, HUD terminated several FHA-specific policies related to reconsideration of value and appraisal fair housing compliance.6U.S. Department of Housing and Urban Development. HUD, OMB Streamline Home Appraisal Process The ROV process for conventional loans backed by Fannie Mae and Freddie Mac remains in place, but if you’re using FHA financing, confirm current procedures with your lender.
Getting the Appraisal Report
You cannot challenge an appraisal you haven’t read, and federal law entitles you to a copy. Under Regulation B, the lender must provide copies of all appraisals and written valuations “promptly upon completion, or three business days prior to consummation of the transaction, whichever is earlier.”7Consumer Financial Protection Bureau. 12 CFR Part 1002 (Regulation B) – Rules on Providing Appraisals and Other Valuations The obligation applies whether your loan is approved, denied, withdrawn, or never completed.
You can waive the three-day advance timing and agree to receive the copy at or before closing, but the waiver must be affirmative, either oral or written. The lender still owes you the report; only the delivery deadline changes. If the deal falls through, the lender must provide your copy within 30 days of determining the transaction will not close.7Consumer Financial Protection Bureau. 12 CFR Part 1002 (Regulation B) – Rules on Providing Appraisals and Other Valuations If closing is approaching and you don’t have the report yet, request it in writing and cite Regulation B.