What happens if the appraisal comes in low?

What happens if the appraisal comes in low?

Appraisal Came In Low in Milton, ON — Act Now or Lose the Deal

Why a low appraisal matters in Milton, Ontario

An appraisal that comes in below the agreed sale price kills financing options. Lenders base their mortgage on the appraised value, not the contract price. If the appraisal is low, the lender offers a smaller mortgage. That leaves a gap the buyer, seller, or both must cover.

In Milton’s fast-moving market — where commuter demand, new developments, and nearby GTA pricing affect values — a low appraisal is not a mystery. It’s a problem you can diagnose and fix if you act fast.

What actually happens when the appraisal comes in low

• Lender reduces the loan amount to the appraised value.
• Buyer must either bring extra cash to close the difference, renegotiate the price, or walk away if their financing contingency allows.
• If the buyer waives appraisal or financing protections, they risk losing deposits or being forced to make up the shortfall.
• Closing is delayed while parties attempt to resolve the gap.

In Milton, these outcomes are amplified because buyers often rely on comparables from across Halton Region and the GTA. Appraisers focus on recent, similar sales. If your comparables are not tightly matched by location, condition, or lot size, the appraisal can swing lower.

7 immediate steps to fix a low appraisal in Milton

1. Pause and quantify the gap

• Review the lender’s appraisal report immediately.
• Identify the dollar gap between the sale price and appraised value.
• Note which comparables the appraiser used and their dates.

1. Request a lender review or second appraisal

• Lenders will allow a review or a second appraisal if you can show the original appraisal missed key comparables or property features.
• Provide a concise package: local MLS comparables, recent solds within Milton, photos of upgrades, permits, and a list of local market drivers (e.g., commuter demand, new schools).

1. Produce a Milton-focused CMA and evidence package

• Pull comparables from the same neighbourhood, similar lot sizes, and within 90 days.
• Highlight upgrades with receipts and municipal permits.
• Include third-party invoices for renovations and professional photos to demonstrate condition.

1. Negotiate a price adjustment or split the difference

• Sellers: Consider a partial price reduction to the appraised value to keep the sale moving.
• Buyers: Offer to cover a portion of the gap with a cash top-up to demonstrate commitment.
• Split the gap — it’s often faster and cheaper than a second appraisal.

1. Use creative financing to bridge the gap

• Buyer pays the difference in cash at closing.
• Seller offers a second mortgage or vendor take-back for part of the shortfall.
• Buyer and seller agree on a temporary concession: closing credits, covering certain closing costs, or prorated property tax adjustments.

1. Ask for repairs to be deferred or credited

• If the appraisal was affected by inspection findings, negotiate credits or a repair allowance.
• Use a local inspection that quantifies costs from Milton contractors; lenders accept repair estimates when tied to safety or habitability problems.

1. Walk away if it’s the right decision

• If the buyer’s financing contingency is active and the gap is unbridgeable, the buyer can cancel and recover deposits.
• Don’t force a deal that creates negative equity or puts the buyer at financial risk.

How Milton specifics change the game

• Regional spillover: Milton buyers often compare prices to nearby Oakville, Burlington, and Mississauga. Appraisers stick to similar Milton-area closed sales, not distant higher-priced towns.
• Rapid development: New subdivisions and new-build pricing distort comparables. Appraisers will weigh resale data against new-build incentives.
• Commuter premium: Proximity to GO Transit and highway access can create localized premiums. Document proximity and commute advantages.
• Property tax and assessment lag: Municipal assessed values can be outdated. Don’t assume MPAC numbers equal market value.

Use local market evidence: recent Milton MLS closed sales, adjustment for lot size and bedroom count, and proof of completed permits.

Preemptive moves for sellers and buyers in Milton

Sellers:

• Order a pre-listing appraisal or broker price opinion to set a realistic list price.
• Get a pre-listing inspection to fix or document issues before offers arrive.
• Prepare a local CMA packet showing sales in the same Milton neighbourhood, within 60–90 days.

Buyers:

• Include an appraisal contingency unless you have substantial cash or plan to waive it consciously.
• Budget for an appraisal gap — in competitive Milton markets, expect to bridge shortfalls.
• Get a home inspection early to identify value-impacting defects and repairs.

How a home inspection ties into appraisal outcomes

Inspections and appraisals serve different purposes. Inspectors look for defects and safety issues. Appraisers focus on market value. But inspection findings influence value when they reveal problems that would affect marketability (e.g., structural, major system failures).

Actionable steps:

• Use the inspector’s report to request a re-evaluation or provide lender documentation for repairs.
• Get repair quotes from local Milton contractors and include them in the lender review.
• If the inspection discovers unpermitted work, provide permits or a plan to obtain them — that can change an appraiser’s assessment.

When to invoke legal or professional help

• If the appraisal appears negligent or factually wrong, ask your agent to request a formal review.
• Use a seasoned Milton realtor who knows which comps appraisers accept.
• Consider a local real estate lawyer if contracts are disputed or deposit returns are contested.

Real examples of workable solutions (how it plays out in Milton)

• Buyer covers the gap: In many Milton offers, the buyer deposits additional cash at closing to match the contract price. This is fast and keeps the deal alive.
• Seller reduces price slightly: Sellers who want a smooth closing may reduce price to the appraisal value and market at the appraised number to avoid legal risk.
• Shared solution: Splitting the gap or offering seller credits often keeps both parties satisfied and avoids delays.

Checklist: What to send to the lender for a review

• Comparable sold reports (Milton-only, last 90 days).
• Photos and description of property upgrades with receipts and permits.
• Recent municipal assessments and property tax records (for context, not proof of market value).
• Contractor repair estimates tied to inspection items.
• Broker letter summarizing why the selected comps are better matches.

Conclusion — A practical plan that saves the deal

A low appraisal is not a full stop. It’s a negotiation trigger. In Milton, the fastest wins: quantify the gap, present local evidence, and choose a bridge strategy. Whether you renegotiate, split the difference, or bring in cash — move fast.

Tony Sousa is your Milton real estate expert. If the appraisal on your Milton home came in low or you want a pre-listing appraisal and inspection strategy, contact Tony at tony@sousasells.ca or 416-477-2620. Visit https://www.sousasells.ca to get a Milton-specific CMA today.

FAQ — Home inspections & appraisals in Milton, Ontario

Q: Can an appraisal be appealed in Milton?
A: Yes. Ask the lender for a formal review and submit Milton-focused comparables, receipts for upgrades, and documentation of recent repairs or permits. A second appraisal is possible but costs money and takes time.

Q: Who pays for a second appraisal?
A: Typically the party requesting it (buyer or seller) pays. Sometimes lenders will cover a review but not a full second appraisal unless there’s evidence of error.

Q: If inspection finds major issues, will that lower the appraisal?
A: It can. Appraisers consider condition when it affects marketability and cost of repairs. Provide repair estimates from Milton contractors to the lender to support requests for re-evaluation.

Q: What’s an appraisal gap and how common is it in Milton?
A: The appraisal gap is the difference between the contract price and the appraised value. It’s common in competitive Milton markets where buyers stretch to win offers and appraisers rely on recent closed sales.

Q: Should sellers do pre-listing inspections or appraisals?
A: Yes. Pre-listing work gives pricing certainty and reduces surprises. In Milton, a pre-listing appraisal or inspection can prevent a post-offer appraisal gap.

Q: If the buyer waives appraisal contingency, what happens if appraisal is low?
A: The buyer assumes the full risk. They must either bring cash to close or accept the lender’s lower mortgage. This can lead to loss of deposit if they can’t perform under the contract.

Q: How do local comparables influence appraisals?
A: Appraisers prioritize recent, nearby closed sales with similar lot sizes, age, and condition. Use Milton-only closed sales within the last 60–90 days to make the strongest case.

Q: How quickly should I act after a low appraisal?
A: Immediately. Most financing contingencies have tight deadlines. Assemble evidence, contact your agent, and request a lender review within days, not weeks.

Q: Where can I get a reliable Milton CMA?
A: A local REALTOR® with access to the MLS and Milton market experience provides the most reliable CMA. Contact Tony Sousa at tony@sousasells.ca or 416-477-2620 for a Milton-specific analysis.

Contact Tony Sousa — Milton Realtor
Email: tony@sousasells.ca
Phone: 416-477-2620
Website: https://www.sousasells.ca