What a low appraisal means for your sale

The number on the report is an opinion of value for a particular purpose and date, and it matters because the lender may use it to determine financing. Fannie Mae’s market value definition, dated June 4, 2025, describes the most probable price in a competitive and open market under stated conditions. Your signed contract reflects what this buyer agreed to pay; it does not dictate the appraiser’s opinion. An appraisal is also different from the local pricing analysis you used when deciding how to list.

For a Fannie Mae purchase loan, the loan-to-value calculation, dated June 1, 2022, uses the lower of the sales price or current appraised value. If the lender maintains the same loan-to-value ratio, a lower value can reduce the loan and increase the buyer’s required cash. Ask the buyer’s lender how the actual loan is affected. A value gap and the extra cash needed are not necessarily the same amount.

Start by asking your agent to obtain the lender’s decision and, if the buyer is willing to share it, the report. The lender’s duty to provide a copy generally runs to the applicant, not the seller. The CFPB’s Regulation B appraisal-copy rule, checked November 1, 2026, applies to covered first-lien applications (CFPB, Regulation B, source). A seller may not automatically receive the appraisal. For a buyer maintaining a 90 percent loan-to-value ratio, the worked example below shows why a $30,000 value gap can mean $27,000 in extra buyer cash.

Which Texas contract deadline applies?

Start with the executed contract and every addendum: the buyer’s rights and the clock depend on what was signed. The TREC Third Party Financing Addendum, form 40-11, effective January 3, 2025, separates buyer approval from property approval. Buyer approval concerns the buyer’s financial qualifications and has its own negotiated deadline. Property approval includes the lender’s underwriting requirements for the property. The appraisal is part of that larger picture (Texas Real Estate Commission, form 40-11, source).

Under paragraph 2B, if the lender determines the property does not satisfy its underwriting requirements, the buyer may terminate on or before the third day before the closing date by giving the seller notice and a copy of the lender’s written statement of reasons. The form provides for a refund of earnest money. If the buyer does not terminate, property approval is deemed obtained. A low number alone does not automatically terminate the contract or establish that the lender’s requirements failed (TREC, form 40-11, source).

Look also for the Addendum Concerning Right to Terminate Due to Lender’s Appraisal, TREC 49-1, effective March 1, 2019. A full waiver addresses termination under paragraph 2B when the opinion of value fails underwriting; a partial waiver applies only when the value meets the amount stated in that addendum. Under either waiver, if the lender reduces the loan because of value, the form increases the cash portion by that reduction. Other property approval issues, such as insurability or lender-required repairs, are separate. Another selection in the form can create an additional termination right tied to a stated value and deadline, with delivery of the appraisal. Read the box actually selected (TREC, form 49-1, source).

FHA and VA financing have separate protections in paragraph 4 of the financing addendum. The buyer may choose to proceed even when the value does not meet the applicable threshold, but the paragraph 2B three-day notice rule does not apply to those protections. The appraisal waiver addendum is not for FHA or VA loans. Under paragraph 4C, if the VA reasonable value is below the sales price, the seller may reduce the price to that value, and the sale closes at that price with proportionate adjustments to the down payment and loan. A VA buyer who chooses to proceed above that value pays the excess in cash from a source disclosed to VA and not borrowed except as VA approves. Confirm the loan-specific requirements with the lender and have your agent or Texas real estate attorney explain the signed documents (TREC, form 40-11, source).

A cash contract without the financing addendum has no paragraph 2B financing exit. An unexpired option period is a separate matter: under the TREC resale contract, form 20-19, effective July 1, 2026, a buyer can terminate without cause by 5:00 p.m. local time on the last option day. The form addresses the option fee and earnest money separately. The option deadline is separate from the property approval deadline, which can fall on the third day before closing (TREC, form 20-19, source).

What can a seller do next?

Start with the buyer’s available cash, then compare a price adjustment and a lender review. With a Fannie Mae loan, the financing and signed contract determine which paths are practical.

Keep the price and assess the buyer’s cash

The buyer may be able to contribute more cash while keeping the agreed price. Ask for a clear explanation of the financing and available funds, recognizing that the lender must approve the structure. The buyer’s side of this decision is explained in our guide to paying an appraisal gap in Frisco. A waiver is a contract provision, not proof that cash is available.

Reduce the price or share the difference

You can agree to a lower price, or negotiate a reduction while the buyer contributes additional cash. Compare the revised net proceeds with the cost and uncertainty of returning to market. Include any other requested concessions or repairs in that comparison. The appraised value is useful information, but it does not require you to accept a price change.

For illustration, the Fannie Mae loan-to-value calculation starts with a $575,000 price, $545,000 appraised value and a buyer maintaining a 90 percent loan-to-value ratio. The loan changes from $517,500 to $490,500. If the price stays the same, the buyer’s cash toward the price rises from $57,500 to $84,500: an extra $27,000, although the price-to-value gap is $30,000. Actual loan terms and closing costs can change the buyer’s calculation. See Fannie Mae’s June 1, 2022 loan-to-value guidance.

Put an agreement in writing

Do not rely on an informal promise to reduce the price or move closing. The TREC Amendment to Contract, form 39-11, effective July 1, 2026, has fields for changes to price, closing date, and allocation of lender-required repairs. Have the parties review the entire amendment and sign any agreed change. Since paragraph 2B’s deadline is tied to closing, an agreed closing-date change can also move that deadline. Recalculate it with your agent (Texas Real Estate Commission, form 39-11, source).

Consider termination and relisting

If the buyer properly terminates under an available right, discuss a fresh pricing and marketing plan. If a buyer does not perform and no termination right applies, do not assume the earnest money automatically belongs to you. The resale contract describes default remedies and earnest-money release procedures; the facts and signed terms matter. Ask a Texas real estate attorney when rights or release are disputed. For related concerns, see what happens when buyer financing falls through in Texas.

Can you challenge the appraisal?

A useful challenge starts with a specific error or a comparable sale the appraisal missed. For a Fannie Mae loan, the buyer, as borrower, initiates a reconsideration of value through the lender; the seller can help assemble evidence. Under Fannie Mae’s September 3, 2025 appraisal quality guidance, the lender reviews the request and sets its own turn times. The appraiser responds in a revised report and may leave the value unchanged. Ask the lender about its process and timing before assuming a review can fit within your contract deadlines.

Read the report if the buyer shares it. Check whether basic property facts and condition are described accurately, and identify specific data that may have been missed. Your agent can offer relevant closed sales and their data sources to the buyer for the lender to consider. The guidance allows up to five additional comparable sales and one borrower-initiated request per appraisal, before closing. Explain why a proposed sale is comparable rather than submitting a list of higher prices alone.

Condition, location, size, features and the quality of the comparable sales matter to a meaningful review. A nearby closed sale may still differ from your home in ways that need adjustment. Document renovations and relevant property details accurately, and ask why an appraiser selected or adjusted a comparable if the report is unclear. A request should identify an error or unsupported analysis, not pressure the appraiser to reach a predetermined figure.

For FHA or VA financing, ask the buyer’s lender about its applicable review process. If you believe an appraiser violated a professional requirement, the Texas Appraiser Licensing and Certification Board complaint guidance, checked November 1, 2026, explains its role. A disagreement with value alone is outside its jurisdiction, and a complaint does not provide a replacement appraisal or require a correction. For the lender review, focus on the guidance’s limit of five additional comparable sales.

How should a Collin County seller weigh leverage?

For a Fannie Mae loan or another type of financing, compare the contract terms with local alternatives. Look at the actual alternatives for your home in Frisco, McKinney, Plano, Prosper, Allen or Celina. In Frisco, compare closed sales with similar location, condition and features; in Prosper or Celina, consider how competing new construction affects the choices available to a buyer. What would a return to market mean for your own move? A buyer’s financing, the contract’s waiver language and your deadline can matter as much as the difference between price and value.

For context, FRED’s Realtor.com listing series shows a Collin County median of 65 days on market in September 2026. Its active listing series shows 4,951 listings that month. Both were checked November 1, 2026. These are countywide listing measures, not a prediction for your street or a measure of closed-sale timing. Ask for current, property-specific comparisons before deciding what a new buyer might pay.

Compare a proposed price cut with the cost of carrying the home through another marketing period and the risk that a new buyer’s appraisal also comes in low. For a Plano ISD property, the school tax rate is $1.03275 per $100 of taxable value (Plano ISD Board Briefs, 2026). Other taxing units, exemptions, interest, insurance, utilities, moving timing and appraisal risk also belong in the comparison. Kaitlin Lovern can help examine the alternatives; see how to evaluate a Frisco home’s value.

What should you avoid agreeing to?

• Do not agree to a price reduction before seeing the whole proposal. Ask how the financing, cash, concessions, repairs and closing date fit together.
• Do not treat a verbal extension as a signed amendment. Confirm the new date and its effect on every relevant deadline.
• Do not promise the lender a particular valuation. Supply accurate evidence and let the lender’s review process run.
• Do not assume a waiver covers every financing problem. Read its selected provision alongside property approval and any remaining option rights.
• Do not sign an earnest-money release you do not understand. Get legal advice if the parties dispute their rights.

The resale contract lists the buyer’s appraisal fee as a buyer’s expense unless the parties agree otherwise. Review any request that you pay it along with the other terms, using the resale contract, effective July 1, 2026, and your signed changes (TREC, form 20-19, source).

Frequently asked questions