When a Connecticut Home Appraisal Comes in Low

 Posted on November 12, 2025 in Real Estate Law

A low appraisal is relatively uncommon in a "normal" real estate market, occurring in about 8 percent of all sales. In a "hot" real estate market, a low appraisal is more common, occurring in approximately 20 percent of all sales, particularly when bidding wars drive up the price of a home.  

In many instances, a home appraisal can make or break a Connecticut real estate deal. If the appraisal comes in lower than the agreed-upon purchase price, the seller worries the deal will collapse, while the buyers panic about obtaining financing. It is important that you understand your rights under the standard Connecticut Residential Purchase and Sale Agreement.

There are several legal and contractual paths to salvage or exit a real estate deal when the appraisal is not what you expected. Acting quickly before deadlines or contingencies expire is important. Having a knowledgeable Fairfield County, CT real estate attorney can make a significant difference in the outcome of your real estate deal.

What Determines an Appraisal Price for Real Estate?

There are many factors that go into the determination of property value. Recent short sales or foreclosures in the area can bring down the appraised value. Some of the factors appraisers use when appraising a home include:

• What have similar homes sold for in the area surrounding the home over the past six months?
• How many months (or years) does it take for the average home in the neighborhood to sell?
• What are the prices of nearby homes, and are home prices in the area trending up or down?
• What is the supply and demand of homes in the area?
• What is the construction quality of the home and the property condition?
• How is the property zoned?
• Is the home "unique" in any way (good or bad)?
• What is the square footage of the home?
• How many bedrooms and bathrooms are there?
• Have there been any major home improvements since the purchase date?
• What is the lot size relative to other homes in the area?

How Do Connecticut Lenders Rely on an Appraisal During a Potential Sale?

Lenders in Connecticut rely on an appraisal to determine the property’s fair market value, which then influences loan amounts, interest rates, down payment requirements, and loan approval. The appraisal’s valuation is used to calculate the loan-to-value (LTV) ratio, which is the mortgage amount divided by the property’s value. Lenders generally have a maximum LTV ratio they will approve. Since the home serves as collateral for the loan, the lender wants to ensure there is sufficient security backing up the loan.

Remedies for Buyers and Sellers When an Appraisal Comes in Low

Buyers can terminate the contract within a specified period if the appraisal value is below the purchase price. Under Connecticut General Statute Section 20-328-7(a), the buyer is entitled to a refund of earnest money deposit assuming proper written notice is given before the contingency deadline. The buyer’s agent can submit an addendum to reduce the purchase price to match the appraised value, or the buyer can submit additional comparable sales or request a reconsideration of value through the lender. The buyer may also increase the down payment for a more favorable loan-to-value ratio.

If an appraisal comes in low, the seller should review the contract for contingencies or consider negotiating a partial price reduction or credit. Closing cost credits can preserve the contract value without formally changing the price. The seller may choose to request a second appraisal or request reconsideration through the buyer’s lender under 12 C.F.R. Section 1026.42(g). If market conditions are favorable, the seller can terminate the sale if the buyer fails to remove contingencies by the deadline. However, the seller should always return the earnest money promptly to avoid a breach of contract claim.  

Contact a Stamford, CT Real Estate Lawyer

A low appraisal does not have to derail your Connecticut home sale or purchase. Before walking away or agreeing to a costly price cut, it can be beneficial to consult with a Fairfield County, CT residential real estate attorney from Law Offices of Daniel P. Weiner. Attorney Weiner can review your contract, contingency deadlines, and appraisal documents, providing legal guidance that leads to a legally sound resolution. To schedule your free consultation, call 203-348-5846 today.