Appraisal Contingency in Washington: What It Is and Your Options If the Appraisal Comes in Low

Important Note Before We Start

This article is for general educational purposes only.
If you are already under contract, your own real estate agent must guide you through appraisal-related decisions, as Washington law does not allow outside agents to advise on another agent’s active transaction.

What follows is an overview of how appraisal contingencies typically work in Washington.

1. What Is an Appraisal Contingency in Washington?

An appraisal contingency protects the buyer if the home’s appraised value comes in lower than the agreed purchase price.

In simple terms:

• The lender orders an appraisal

• The appraiser determines market value

• If value supports the price, escrow moves forward

• If value is low, the contingency outlines what happens next

Most financed offers in Washington include an appraisal contingency, even in competitive markets.

2. Why Appraisals Matter So Much in WA Transactions

Appraisals aren’t about what a buyer wants to pay — they’re about what a lender is willing to lend.

Lenders rely on appraisals to:

• Confirm market value

• Reduce lending risk

• Ensure the property meets loan requirements

If the appraisal doesn’t support the price, the lender will not finance the full amount — regardless of emotions or market heat.

3. Common Reasons Appraisals Come in Low

Low appraisals happen more often than people realize, especially in fast-moving Washington markets.

Common causes include:

• Rapid price appreciation

• Limited comparable sales

• Multiple-offer situations driving prices up

• Condition differences between the subject property and comps

• Appraiser conservatism in uncertain markets

This is one reason some transactions fall apart even after strong offers are accepted:
Why WA Homes Fall Out of Contract (Real Reasons Deals Collapse)
 

4. How the Appraisal Contingency Typically Works

When an appraisal comes in low, the contingency outlines the buyer’s rights.

Depending on the contract language, buyers may be able to:

• Proceed anyway

• Renegotiate price or terms

• Withdraw from the contract

The exact outcome depends on how the offer was written and whether any appraisal protections were waived or modified.

5. Option 1: Buyer Brings Additional Cash

One common resolution is for the buyer to:

• Pay the difference between appraised value and purchase price out of pocket

This is more likely when:

• Buyers have strong cash reserves

• The home is highly desirable

• The buyer wants to stay competitive

However, not all buyers are comfortable or able to do this.

6. Option 2: Renegotiating the Purchase Price

Another common outcome is price renegotiation.

This may involve:

• Seller reducing the price to appraised value

• Meeting somewhere in the middle

• Adjusting other terms to balance the deal

Successful renegotiations often come down to market conditions, backup offers, and timing.

7. Option 3: Changing Loan Structure or Terms

In some situations, buyers may explore:

• Different loan programs

• Adjusted down payments

• Changes that impact loan-to-value ratios

These conversations happen between the buyer and their lender, guided by their agent.

8. Option 4: Termination Under the Contingency

If no agreement can be reached and the appraisal contingency remains in place, the buyer may be able to:

• Terminate the contract

• Recover earnest money (depending on contract terms)

This is never anyone’s first choice, but it is a built-in protection when contingencies are intact.

9. How Low Appraisals Affect Sellers Emotionally

For sellers, a low appraisal can feel personal — but it isn’t.

Appraisals:

• Are opinions of value at a specific moment in time

• Use historical data

• Often lag behind fast-moving markets

Understanding this helps sellers respond strategically rather than emotionally.

10. Appraisals and Disclosure Expectations

Condition issues uncovered during inspections or disclosed on Form 17 can influence appraisal outcomes.

Appraisers consider:

• Deferred maintenance

• Safety issues

• Functional obsolescence

If you want a deeper understanding of seller disclosures and how they impact transactions:
WA Form 17 Seller Disclosure: A Simple, Complete Guide for Washington Sellers
 

11. Appraisal Challenges When Selling and Buying at the Same Time

Low appraisals can be especially stressful for homeowners who are:

• Selling one home

• Buying another simultaneously

Timing, cash flow, and contingency coordination matter greatly in these situations:
The Step-by-Step Move-Up Buyer Plan: How to Sell Your Current Home & Buy Your Next One Smoothly in Washington (2025 Guide)
 

12. The Big Picture: Appraisals Are a Checkpoint, Not a Verdict

A low appraisal doesn’t automatically kill a deal — but it does force decisions.

Understanding the appraisal contingency:

• Reduces panic

• Sets realistic expectations

• Helps both parties evaluate options logically

And once again, if you are already under contract, your own agent must advise you on how appraisal outcomes apply to your specific transaction.

If you’re preparing to buy or sell in Washington and want to understand appraisal realities before you’re under contract, learning this process early can save a lot of stress later.

 Written by: Lani Fisher — Washington Realtor Helping Everyday Buyers & Sellers With Confidence