Appraisals: What Buyers & Sellers Should Know

If you’re buying or selling a home, the word “appraisal” is going to come up. For a lot of people, this is the part of the process that feels confusing or even stressful. But it doesn’t have to be.

An appraisal is just a professional opinion of what a home is worth. Lenders require it because they want to make sure the property is really worth the amount being borrowed. An appraiser will look at recent sales in the neighborhood, the condition of the home, and the overall market here in Austin. It’s basically a reality check to confirm value. For buyers, this means protection from overpaying. For sellers, it’s a reminder that pricing your home realistically is important because a low appraisal could slow things down. And for investors, the appraisal number directly affects financing and returns.

It happens—especially in neighborhoods where prices are climbing. When that number doesn’t match the contract price, there are a few ways forward.

First Thing: Renegotiate
The first move is usually to go back to the table. If the home appraises low, the buyer can ask the seller to lower the price. In many cases, sellers agree because they don’t want to risk starting all over again with a new buyer. It’s not always easy, but negotiation is often the cleanest way forward.

Second Option: The Buyer Brings Cash
If the seller won’t lower the price, the buyer can decide to make up the difference out of pocket. For example, if the home is under contract for $500,000 but the appraisal says $480,000, the buyer might put in an extra $20,000 to keep the deal alive. This option is common in Austin’s competitive neighborhoods where buyers don’t want to lose the house they love.

Third Option: Cancel the Contract
Sometimes, neither side wants to budge. The contract usually gives buyers an out if the appraisal comes in low. That means the buyer can walk away, cancel the deal, and get their earnest money back. It’s disappointing—but it’s better than being locked into a deal that doesn’t make financial sense.

What Sellers Should Know
For sellers, remember: the appraisal sticks with your house. If one buyer’s deal falls apart because of a low appraisal, the next buyer’s lender may see the same number. That’s why pricing correctly—and preparing your home to show its value—is so important in Austin’s fast-changing market.

Appraisals aren’t there to ruin the deal. They’re part of making sure buyers, sellers, and lenders are all on solid ground. Knowing how they work gives you peace of mind and helps keep your transaction on track.

If you’re thinking about buying or selling, a Real Estate professional will guide you through every step—including the appraisal—so you can move forward with confidence.

Connect with one of our agents today!