What to Expect During the Home Appraisal Process When Selling in New York

When a buyer is financing their purchase, their lender requires an independent appraisal of the property before issuing a mortgage commitment. The appraisal determines whether the home's market value supports the purchase price the buyer is paying. If the appraisal comes in below the contract price, it creates one of the more stressful negotiating moments in any real estate transaction.

Here is what sellers need to know about the appraisal process and how to navigate it.

What the Appraisal Is For

The lender's primary concern is that if the buyer defaults and the lender forecloses, the property can be sold for enough to recover the loan balance. An appraisal below the contract price tells the lender that the buyer is paying more than the home is worth – and the lender will not lend the full amount needed to close at that price.

The buyer is protected, in a sense – they can't be forced to close at a price their loan won't support. But the seller's contract is at risk when a low appraisal appears.

How the Appraisal Process Works

The buyer's lender orders the appraisal through an Appraisal Management Company (AMC), which assigns an independent licensed appraiser. The seller or their agent must provide access to the property for the appraiser's inspection, which typically takes 30 to 60 minutes.

The appraiser inspects the property's condition, size, features, and quality. They photograph the interior and exterior. They review the neighborhood and assess location characteristics. Then they research recent comparable sales – applying the same general methodology as a CMA – and produce a written appraisal report that includes their opinion of market value.

The appraiser submits the report to the AMC, which delivers it to the lender. The lender shares it with the buyer and their agent.

What Sellers Can Do to Support the Appraisal

You cannot control the outcome of an appraisal, but you can make it easier for the appraiser to accurately assess your home's value.

Have the home in good condition for the appraisal visit. Appraisers are observing condition, and a home that shows well helps them form a positive impression of maintenance quality and upkeep.

Prepare a document for the appraiser listing any significant improvements made during your ownership – kitchen renovation with date and approximate cost, new HVAC system, roof replacement, bathroom updates. Appraisers may not find every improvement in permit records; providing this information helps them capture improvements that support value.

If you have strong recent comparable sales that the appraiser might miss – a sale that closed very recently and might not yet appear in MLS data, or a particularly relevant comp in a micro-location that could be overlooked – share this information with your agent, who can provide it to the buyer's agent to pass along to the appraiser appropriately.

What Happens If the Appraisal Comes In Low

A low appraisal creates a gap between the contract price and the appraised value. Resolution options:

Price reduction. The seller agrees to reduce the contract price to the appraised value. The buyer closes at the lower price. This is the most common resolution and the one that most sellers ultimately accept to save the transaction.

Buyer makes up the difference. If the buyer has additional cash, they can pay the difference between the appraised value and the contract price out of pocket. The loan is based on the appraised value; the buyer brings additional cash to cover the gap.

Meet in the middle. Seller reduces somewhat, buyer brings some additional cash – a negotiated split of the appraisal gap.

Dispute the appraisal. If you believe the appraisal is incorrect – specifically, if you have comparable sale data that the appraiser ignored or misweighted – you can ask the buyer to request a reconsideration of value from the lender. This involves submitting specific comparable sales with supporting documentation. Successful reconsiderations happen, but they require substantive evidence, not just disappointment with the number.

Cancel the transaction. If the gap is too large and neither party will move enough to bridge it, the deal may fall through. This is the worst outcome for both sides and is typically avoided if there is room to negotiate.

I prepare sellers for the appraisal process in advance and support the transaction through any appraisal challenges that arise. Call me at (321) 447-4259 or visit movewithricky.com.

Rakesh (Ricky) Khanna | Licensed Real Estate Salesperson
Better Homes and Gardens Real Estate Realty Connect
Call or text: (321) 447-4259 | movewithricky.com