What Happens If the Appraisal Comes In Low in Grapevine, TX?

Quick answer: When an appraisal comes in below the contract price, you generally have these options: the seller lowers the price, the buyer pays the difference in cash, both sides split it, the buyer asks the lender for a reconsideration of value, or the buyer terminates if the contract gives that right. Under the TREC Third Party Financing Addendum (Form 40-11), a buyer whose lender finds the property doesn't meet its underwriting requirements, including appraisal, may terminate on or before the 3rd day before the Closing Date, with written notice and a copy of the lender's written statement, and the earnest money is refunded to the buyer. Missing that deadline, or waiving the right, can change the outcome.

By Chris Minteer, Founder and Co-Owner, Minteer Real Estate Team · Published October 7, 2026 · Last updated October 12, 2026

A low appraisal can feel like a deal falling apart. It isn't automatically, but it is the moment when the price you agreed to and the value a licensed appraiser supports stop matching, and someone has to close that gap. Here's how the TREC contract handles it and what your choices are. This is general information about TREC forms, not legal advice; read your own contract and ask your agent or a Texas real estate attorney.

Why can an appraisal come in below the contract price?

An appraisal can come in low when the contract price is above what recent comparable sales support. Appraisers rely heavily on recent comparable sales, not on current listing prices or on how much a buyer wanted the home. In a competitive market, an offer above recent comparable sales may appraise below the contract price, and an appraisal can lag the market because comparable sales have to close and be recorded first. For example, a buyer who offers $40,000 over list to beat other offers may find the appraisal doesn't follow. For local prices, see our June 2026 DFW Housing Market Update.

What are your options when the appraisal comes in low?

You generally have five, and which one fits depends on how much room everyone has.

• The seller lowers the price. Nothing in the TREC financing addendum requires the seller to do this. A price change needs both sides to agree in writing, through an amendment to the contract (confirm the current TREC amendment form with your agent).
• The buyer pays the difference in cash. On conventional loans, the loan-to-value ratio is generally based on the lesser of the sales price or the appraised value, so the lender won't lend more to cover the gap. The buyer covers it, on top of the planned down payment. Lender guidelines apply.
• Both sides split the gap. The seller reduces the price part of the way and the buyer covers the rest in cash.
• The buyer asks for a reconsideration of value. You can ask your lender to submit a reconsideration of value with specific comparable sales or property details the appraiser may have missed. Lenders decide whether an adjustment is appropriate, so the value may or may not change.
• The buyer terminates. See the next section for how that works and its deadline.

Can the buyer walk away and get earnest money back?

Often yes, under the right conditions, but it is not automatic. Under the TREC Third Party Financing Addendum (Form 40-11, Paragraph 2B), if the buyer's lender determines the property doesn't meet the lender's underwriting requirements, including appraisal, the buyer may terminate on or before the 3rd day before the Closing Date by giving the seller (1) notice of termination and (2) a copy of a written statement from the lender setting out its reasons. The earnest money is then refunded to the buyer. The addendum treats time as of the essence, so confirm the exact date in your contract. The right isn't available if you waived it (see below), if there's no financing addendum, as with a cash purchase, or if the deadline passes.

FHA and VA financing have their own appraisal provisions in Paragraph 4 of the addendum, so the rules above can differ. For VA loans, the addendum says the seller may reduce the price to the VA's reasonable value, or the buyer may pay the excess in cash.

What does it mean to waive the appraisal protection?

Some buyers sign TREC Form 49-1, the Addendum Concerning Right to Terminate Due to Lender's Appraisal. It lets the buyer (1) waive the Paragraph 2B termination right entirely, (2) waive it only if the appraised value is at or above a stated amount, or (3) keep or add a separate right to terminate if the appraisal falls below a stated amount, within a stated number of days. If the buyer waives and the lender reduces the loan because of the appraisal, the cash portion of the Sales Price increases by that amount. Form 49-1 is not used with FHA or VA financing.

Source: TREC Forms 40-11 and 49-1. Read your own signed forms; the boxes you checked control.

What should sellers know about a low appraisal?

A low appraisal isn't only the buyer's problem. If a deal ends over an appraisal gap, the seller may relist and start showings again. Pricing from the start in line with what recent comparable sales support can reduce the chance of renegotiating late in the process. See also our post on a smooth closing day.

How can buyers prepare before bidding above list price?

1. Know your cash cushion. If you're considering offering $20,000 to $50,000 over list, for example, work out in advance how much of that you could cover in cash if the appraisal doesn't support it.
2. Understand what you're giving up before you waive anything. Waiving appraisal protection can leave you exposed to the full difference. Ask your agent to walk you through Form 49-1 before you sign.
3. Review comparable sales. A good way to judge a bid is to look at what recent closed sales support, not only what the listing price implies. We review comparable sales and cash exposure with buyers before offers.
4. Consider the inspection too. Waiving both inspection and appraisal protection stacks risk. Read Top 10 Things on a Home Inspection for North Texas Residents and ask a licensed professional before giving up either.

Frequently asked questions

Who pays if the appraisal comes in low in Texas?

There's no automatic answer. It's negotiated. On a conventional loan the lender generally lends against the lesser of the price or appraised value, so the buyer, the seller, or both cover the gap, or the buyer terminates if the contract gives that right.

Does the seller have to lower the price if the appraisal is low?

No. Nothing in the TREC financing addendum requires the seller to lower the price, and a price change needs both sides to agree in writing. The buyer can pay the difference, split it, request a reconsideration of value, or terminate if the contract allows.

Can I waive the appraisal protection to make my offer more competitive?

You can, using TREC Form 49-1 on non-FHA, non-VA loans, but it can leave you responsible for the gap. A full waiver gives up the right to terminate over appraisal, and the cash portion of the price increases by any loan reduction. Partial-waiver and additional-right options also exist. Talk through your cash reserves before deciding.

Do low appraisals happen more in a competitive market?

They can. An offer above recent comparable sales may appraise below the contract price, because appraisers rely heavily on recent comparable sales. We don't have a source for how often it happens locally, so check current data with your agent.

What is a reconsideration of value, and does it work?

It is a request to re-assess the appraised value. You can ask your lender to submit one with specific comparable sales or property details the appraiser may have missed. Lenders decide whether an adjustment is appropriate, so the value may or may not change.

Sources

• Third Party Financing Addendum, TREC No. 40-11 — Texas Real Estate Commission
• Addendum Concerning Right to Terminate Due to Lender's Appraisal, TREC No. 49-1 — Texas Real Estate Commission
• Loan-to-Value (LTV) Ratios, Selling Guide B2-1.2-01 — Fannie Mae
• FHFA Announces Enterprise Reconsideration of Value Policies — Federal Housing Finance Agency
• Mortgage borrowers can challenge inaccurate appraisals through the reconsideration of value process — Consumer Financial Protection Bureau
• June 2026 DFW Housing Market Update — Minteer Real Estate Team
• NTREIS Agent Market Share reports, single-family residential, City of Grapevine and City of Colleyville, January 1 to December 31, 2025, ranked by total sides (reports run October 23, 2026)
• Minteer Real Estate Team profile, RealTrends Verified (2025 sales data)

Checked October 12, 2026.

If you're getting ready to buy in Northeast Tarrant County, we'd be glad to talk through your timeline and what to expect at each step. Start at minteerteam.com/buying, or reach the team at (817) 796-9172.

About the author: Chris Minteer founded Minteer Real Estate Team in 1986 and is a REALTOR® with the team, a full-service residential real estate team based in Grapevine, Texas, serving Northeast Tarrant County and the greater Dallas–Fort Worth metroplex. #1 in Grapevine, #3 in Colleyville and top 3 in GCISD for single-family transactions in 2025, per NTREIS. RealTrends Verified 2026: #1 team in Grapevine by volume and by sides (2025 sales data). Minteer Real Estate Team is brokered by Real Broker, LLC (Broker #9003138). 216 W Wall St #100, Grapevine, TX 76051 · (817) 796-9172 · info@minteerteam.com · REALTOR® · Equal Housing Opportunity.

This article is general information about TREC forms, not legal, tax, or financial advice. Forms and lender rules change; confirm details with your agent, your lender, or a Texas real estate attorney.