If the appraisal “meets value” and is equal to your purchase price, good news! You’re moving forward and have secured the accurate price for the home.
If the appraised value is greater than your purchase price, even bigger congrats! This means that you’re walking into homeownership with immediate equity and underpaying for your home. This will not force you into a higher price or change the terms of your contract.
If the home doesn’t appraise, meaning your agreed-upon purchase price is higher than the appraised value, there are a couple options to take care of this appraisal “gap.” If you have an appraisal contingency written into your contract, you have some protection. You can negotiate that the seller reduces the price to match the value. If they refuse to reduce the price, you can either terminate the contract and receive an earnest money refund OR you can pay the appraisal gap out of pocket at closing to move forward with the purchase. If you don’t have an appraisal contingency, you are liable to move forward and pay this gap at closing. For example, if your price is $500k and the home appraises for $480k, you would bring the difference, $20k, to closing in addition to your down payment and closing costs