What happens when a home's appraisal comes in lower than the accepted sales price?

When a home's appraisal comes in lower than the accepted sales price, the lender will only approve a loan based on the property's appraised value. This is because lenders want to ensure that the money they lend is secured by collateral that is worth at least as much as the loan amount. If the appraisal is less than the sales price, it raises concerns about the property's market value.

In this situation, the lender may require the buyers to either come up with a larger down payment to make up the difference or negotiate with the seller to reduce the sales price to match the appraised value. This ensures that the lender is not taking on excessive risk by lending more than what the property is deemed worth according to the appraisal.

The other potential answers do not reflect the typical processes that occur in real estate sales and lending. The idea that Claire must refund the buyers for the cost of the appraisal is not aligned with industry practices, as appraisal fees are typically the buyer's responsibility. Taking the house off the market is not a requirement based on an appraisal outcome; the seller can choose to proceed with the sale or adjust the price further to facilitate the transaction. Lastly, the notion that the appraiser must perform a second appraisal is not a standard procedure; the initial appraisal