What if my refinance appraisal comes in low?
If your refinance appraisal comes in below expectation, you can request a reconsideration of value with new comparable sales, order a second appraisal from a different lender, reduce the cash-out amount you were seeking, or bring cash to closing to cover a shortfall against a payoff. A reconsideration succeeds most often within 5 to 10 business days when you can show the appraiser missed comparable sales, made a factual error, or lacked full renovation documentation.
What a low appraisal does to the refinance
| Situation | Effect of a low appraisal |
|---|---|
| Rate-and-term refinance | Loan amount shrinks; may not fully pay off existing debt |
| Cash-out refinance | Cash-out proceeds shrink or disappear entirely |
| DSCR coverage ratio | A lower value at the same rent can actually help DSCR, but a lower loan means less proceeds |
| Paying off a bridge or hard money loan | May leave a gap you must cover in cash |
The 4 responses, in order of speed
1. Request a reconsideration of value. Submit additional comparable sales the appraiser may have missed, correct any factual errors (wrong square footage, wrong bed/bath count, wrong lot size), and provide documentation of any renovation with receipts and before-and-after photos. This is free and the fastest path, typically 5 to 10 business days for a response.
2. Order a second appraisal. Some lenders allow this, at your cost, from a different appraiser. Not all lenders permit it, and appraisal management companies sometimes assign appraisers with limited local market knowledge; a second opinion can genuinely be more accurate.
3. Reduce the loan amount or cash-out request. If the value came in lower but still supports the loan you need, simply proceed at the lower amount.
4. Bring cash to cover a shortfall. If the refinance was meant to pay off a bridge or hard money loan and the new loan amount falls short, you cover the difference from your own funds at closing.
Why appraisals miss
- The appraiser did not have your renovation scope or receipts.
- Comparable sales used were dated, too far away, or a different property type.
- The market shifted between when comps were listed and the appraisal date.
- A rushed or unfamiliar appraiser in a market they do not work often.
Preventing it next time
Provide the appraiser with a packet before the inspection: your own comparable sales research, renovation receipts and photos, and a summary of any income documentation like leases. Appraisers work from what they are given; a thin file gets a conservative number.
A worked example
Expected value $500,000 to support a $350,000 payoff of a hard money loan; appraisal comes in at $460,000, supporting only $322,000 at 70 percent loan-to-value. A reconsideration with 3 additional comparable sales and renovation receipts raises the value to $485,000, producing a $339,500 loan, still short by $10,500, which the borrower brings in cash at closing.
How CommFi handles it
Our lending desk builds the comp package and renovation documentation before the appraisal is ordered, to reduce the odds of a low number in the first place. When one still comes in low, the desk manages the reconsideration and, if needed, searches a database of 7,000+ lenders for one willing to accept a second appraisal. Zero upfront fees.
Related reading
Related questions
- What can I do if my refinance appraisal is too low?
- Request a reconsideration of value with new comps and documentation, order a second appraisal if the lender allows it, reduce the loan amount, or bring cash to cover the gap.
- How long does an appraisal reconsideration take?
- Typically 5 to 10 business days once you submit additional comparable sales and documentation.
- Can I get a second appraisal if I disagree with the first?
- Some lenders allow it at your cost. Ask before assuming this is available.
- What documentation helps get a higher appraisal?
- Renovation receipts and before-and-after photos, your own comparable sales research, and current lease documentation if the property is rented.
- What happens if the appraisal is too low to pay off my existing loan?
- You bring the shortfall in cash at closing, or reduce the payoff by negotiating with the existing lender if possible.
Property developer and licensed appraiser. 22+ years in real estate: TIC conversions, multi-unit redevelopments, mixed-use, fix and flips, commercial DSCR.