They agreed on the price. The appraisal came in lower.

A buyer and a seller agree. They sign a promise. Then the bank's appraisal comes in below the agreed price.

That on its own doesn't change the sale price.

It changes something else: the financing math.

Say they agreed on $400,000 and the appraisal comes in at $370,000.

The bank doesn't necessarily size its loan against the $400,000 the parties agreed on. It applies its credit policy, the buyer's capacity, and the value it recognizes for the property.

If the appraisal supports less than expected, the buyer can end up needing more cash to close. Or the parties have to revisit how the deal is structured.

The problem is that this conversation usually arrives after the signing.

Which is why it belongs before.

And an appraisal that lands low doesn't automatically prove the property is overpriced.

An appraiser works with references and a methodology built for a specific purpose. When there are few comparable transactions, a very particular property, or a market that has moved quickly, distance can open up between what buyer and seller are willing to agree on and what the appraisal can support.

Sometimes the price is high.

Sometimes there aren't enough references to hold it up.

Telling those apart matters.

An appraisal, market value and the sale price are not the same thing — and confusing them is what makes this situation catch people off guard.

Before signing a promise with financing involved, I'd want three things settled:

— What base and what conditions the bank will use to size the financing.
— What references support the agreed price.
— What happens if the appraisal lands low and the financing falls short of what you expected.

That last one I wouldn't leave for a later conversation.

I'd have it settled before signing.

An appraisal doesn't decide the price. But it can change how much money you need to bring to closing.

That conversation belongs before the signature, not after.