Why it happens
Competitive offers, unique properties with few comparables, a market that has cooled since the sale, or renovations the appraiser did not credit at full cost all produce a lower number.
Your options
You can cover the difference in cash, request a second appraisal with better comparables, approach a lender that uses a different appraisal panel, or renegotiate with the seller if the deal is still conditional.
- Add cash to the down payment to bridge the gap
- Provide the appraiser with recent comparable sales
- Ask your broker to submit to a different lender
- Renegotiate while a financing condition is still alive
Keep the financing condition
This is the single reason not to waive financing on a competitive offer unless the file is bulletproof. A firm deal with no financing means the shortfall is your problem and your deposit is at risk.
Get ahead of it
Before you offer, ask what similar units in the building or on the street have actually closed at. If your offer is well above them, plan for the possibility of a shortfall.
Frequently asked questions
- Who pays for the appraisal?
- Usually the borrower, though some lenders cover it as part of a promotion.
- Can I dispute the appraisal?
- You can submit supporting comparables through your broker, and a second opinion is sometimes accepted.
- Does a low appraisal cancel the deal?
- Not automatically. It only ends the deal if you cannot fund the gap and no condition protects you.
Talk to a Toronto private mortgage specialist
We arrange equity-based financing across Toronto and the GTA, whether you need a first position from a private lender or a second mortgage behind the bank you already have.