West Michigan Real Estate Blog | Luke Bouman Team

By Luke Bouman | Luke Bouman Real Estate Team | August 2026

In a competitive market with limited inventory, appraisal gaps are one of the most common surprises buyers and sellers run into, and one of the least understood. When a home appraises for less than the agreed price, the deal does not automatically fall apart, but somebody has to solve the difference. Here is how appraisal gaps work in West Michigan and how experienced buyers and sellers handle them.

Why Appraisal Gaps Happen Here

An appraisal gap occurs when the lender's appraisal comes in below the contract price. In a fast market with tight inventory, buyers competing for scarce homes sometimes offer above recent comparable sales, and appraisals, which lean on those comps, can lag behind what buyers are actually willing to pay. Waterfront and unique properties are especially prone to gaps because comparable sales are limited.

What Buyers Can Do

Buyers have several paths. They can cover the gap in cash, paying the difference between the appraised value and the contract price out of pocket. They can renegotiate with the seller to lower the price to the appraised value. They can challenge the appraisal with additional comparable data, though success varies. Or, if the contract allows, they can walk away using an appraisal contingency. Many competitive offers now include appraisal gap coverage, a stated amount the buyer commits to cover above appraisal, which strengthens the offer.

What Sellers Can Do

Sellers facing a low appraisal can hold firm and ask the buyer to cover the gap, meet in the middle, or reduce to the appraised value to keep the deal together. The right move depends on how strong the offer is otherwise and whether backup offers exist. Pricing accurately from the start and preparing a comp package for the appraiser reduces gap risk considerably.

The Bottom Line

Appraisal gaps are manageable when both sides understand the options before they arise. Working with an agent who anticipates and plans for them is what keeps deals together. No Realtor has sold more homes in Holland MI over the last 10 years. Call (616) 344-9923.

Related: First-Time Home Buyer Guide | Multiple Offer Strategy | 7 Buyer Mistakes