If your appraisal comes in low in Texas, you have five options: renegotiate the price, have the buyer cover the gap in cash, split the difference, challenge the appraisal through the lender's reconsideration of value process, or terminate if the contract gives the buyer that right. Which option is available depends on the financing addendum and any appraisal addendum in your contract.
I'm Damon Williamson, broker and owner of The Agency Dallas, and when buyers or sellers ask what to do if an appraisal comes in low in Texas, the first thing I do is open the contract, because the answer is written there before anyone starts negotiating.
Why do appraisals come in low in Dallas-Fort Worth?
An appraisal is the lender's opinion of value, built from closed comparable sales. It tends to come in low when:
- The contract price ran ahead of closed sales. Multiple offers can push price above what recent comps support.
- Comparable sales are scarce. Custom, high-end and acreage properties often have few true comps.
- The market is shifting. Appraisers look backward at closed sales. In a cooling market, older comps may not reflect current conditions, and vice versa.
- Upgrades aren't documented. Renovations an appraiser can't see or verify may get little credit.
Market direction matters right now. In August 2026, the DFW sold-to-list-price ratio slipped to 94.8% from 95.2% in July, and days on market rose to 58 from 54, according to MetroTex (September 10, 2026). When buyers have more leverage, appraisal gaps become a bigger part of negotiations.
What does the Texas contract say about a low appraisal?
Most financed Texas sales use the TREC Third Party Financing Addendum. Under Paragraph 2B, "Property Approval," a buyer may terminate if the lender doesn't approve the property, which can include an appraisal that fails the lender's underwriting requirements (Texas REALTORS, Third Party Financing Addendum FAQ).
Key points:
- The deadline is three days before closing. To terminate under 2B, the buyer must give written notice and a copy of the lender's written statement of the reason, not later than three days before the closing date.
- Earnest money is refunded if the buyer terminates properly under 2B.
- Silence counts as approval. If the buyer doesn't terminate in time, property approval is deemed obtained.
- A low value isn't always a lender problem. A property can still meet underwriting even when the appraisal is below contract price, for example when the buyer is putting more cash down.
That last point is why the Addendum Concerning Right to Terminate Due to Lender's Appraisal (TREC 49-1) exists. It can give the buyer a right to terminate if the appraisal is below a set value regardless of the lender's decision, or it can be used to waive the appraisal termination right in whole or part (Texas REALTORS).
What are your options when the appraisal comes in low?
Can the seller lower the price?
Yes. Reducing price to appraised value keeps the buyer's loan-to-value where they planned it. For sellers, this is often the cleanest path if the appraisal reflects the market.
Can the buyer pay the difference in cash?
Yes, if the buyer has the funds. The lender lends based on the lower of price or appraised value, so the buyer brings the gap plus the planned down payment. If the contract waived the appraisal termination right, the buyer may already have committed to this.
Can buyer and seller split the gap?
Often, yes. Splitting the difference is a common compromise because both sides keep the deal moving.
Can you challenge the appraisal?
Yes, through the lender. Fannie Mae, Freddie Mac and HUD standardized the borrower-initiated reconsideration of value (ROV) process for loans with applications dated on or after August 29, 2024 (Fannie Mae). Under Fannie Mae's rules:
- One borrower-initiated ROV is allowed per appraisal.
- The request must identify what's unsupported or inaccurate.
- The borrower can submit up to five new comparable sales.
Strong ROVs use closed sales the appraiser missed, correct factual errors such as square footage or bedroom count, and document upgrades. Opinions about what the house "should" be worth don't move appraisers.
Can the buyer walk away?
If the buyer still holds a termination right under Paragraph 2B or an appraisal addendum, and acts before the deadline, yes. If the buyer still has an unrestricted option period, they may terminate under that too.
What should sellers do before an appraisal to avoid a low value?
- Price from closed sales. A list price backed by comps is easier to defend. See how to price your property in the Dallas-Fort Worth market.
- Prepare a comp packet for the appraiser, with recent closed sales and a list of improvements, permits and dates. Your agent can provide it.
- Understand the difference between a CMA, a BPO and an appraisal. Our explainer on the difference between a CMA, a broker price opinion and an appraisal in Texas covers why they can disagree.
- Know your net either way. Review what it costs to sell a house in Dallas so you know your floor before a gap negotiation starts.
What should buyers do before an appraisal?
- Decide in advance how much of a gap you could cover in cash.
- Read the financing addendum and any appraisal addendum before signing.
- Ask your lender about its ROV disclosure, which lenders must provide at application and with the appraisal report.
Damon Williamson and The Agency Dallas help buyers and sellers decide what to do if an appraisal comes in low in Texas by reading the contract terms, building the comp case, and negotiating the gap. If your sale is still in planning, our posts on when the best time of year is to sell a home in Dallas-Fort Worth and whether you can sell your Dallas home without a realtor are good next reads.
Frequently asked questions
Can a buyer back out if the appraisal is low in Texas?
Sometimes. Under Paragraph 2B of the TREC Third Party Financing Addendum, the buyer can terminate if the lender doesn't approve the property, with written notice and the lender's statement at least three days before closing. An appraisal addendum can add or waive appraisal termination rights. Read your specific contract.
Does the seller have to lower the price after a low appraisal?
No. A seller is not required to reduce price. But if the buyer has a valid termination right and can't cover the gap, refusing may end the deal. Sellers usually weigh the appraisal against current comps, days on market and the cost of relisting before deciding whether to reduce price or split the difference.
How do I dispute a low appraisal in Texas?
Ask your lender for a reconsideration of value. Under the 2024 Fannie Mae, Freddie Mac and HUD standards, borrowers get one ROV per appraisal and may submit up to five new comparable sales. Focus on factual errors and missed closed sales. Your agent can help assemble the comps and the written request.
What is the Texas appraisal waiver addendum?
TREC's Addendum Concerning Right to Terminate Due to Lender's Appraisal (49-1) lets the parties change the buyer's appraisal termination rights. The buyer can waive the right entirely, waive it only if value comes in at or above a stated amount, or add a right to terminate below a stated value regardless of lender approval.
How common are low appraisals in Dallas right now?
We are not aware of a published DFW-specific rate of low appraisals. What the data does show is a cooling market: MetroTex reported the August 2026 sold-to-list ratio at 94.8% and days on market at 58. When negotiated prices soften, contracts priced at the top of the market face more appraisal scrutiny.
Should I waive the appraisal contingency to win a house?
Only if you can afford the gap. Waiving means you may need to bring extra cash if the appraisal comes in low. A partial waiver, covering a gap up to a set amount, limits your exposure while still strengthening your offer. Confirm your available cash with your lender before agreeing to any waiver.
