You found the home. You made an offer. The seller said yes. Then the bank's appraiser visits, and the number comes back lower than the price you agreed to pay. What happens now?
First, take a breath. This does not automatically kill the deal. But it does change the math, and it is better to understand it now, before you are in the middle of it.
What is an appraisal, in plain words?
An appraisal is an expert opinion of what a home is worth, written by an independent appraiser. The appraiser does not work for you and does not work for the seller. In most cases, the appraiser is hired through your lender, the bank or lender giving you the mortgage.
The appraiser looks at the home itself, its size, its condition, its upgrades, and, most importantly, at recent sales of similar homes nearby. Those similar recent sales are called comparables. The appraiser is looking backward at what similar homes actually sold for, not forward at what you hope the home will be worth one day.
Here is the surprise most first-time buyers do not know: the appraisal protects the lender first. The lender wants to know that if something went wrong and it had to sell the home, it could recover the money it lent. A low appraisal can also protect you, because it can warn you that you may be paying more than similar homes have recently sold for. But the appraisal is ordered for the lender's decision, not as a favour to you.
The one rule that decides everything
Your lender will base your mortgage on the lower of two numbers: the price you agreed to pay, or the appraised value. Not the higher one. The lower one.
Let me show you with a simple example, for a buyer with 20% down. Say you agree to pay $550,000. You planned a $110,000 down payment, which is 20%, and a $440,000 mortgage, which is 80%.
Now say the appraisal comes back at $530,000, which is $20,000 lower. Your lender will lend 80% of $530,000, not 80% of $550,000. That is $424,000. To still buy the home at $550,000, you would need $126,000 in cash, instead of the $110,000 you planned. That is $16,000 more cash than planned.
Why $16,000 and not $20,000? Because the mortgage itself also shrinks, by 80% of the $20,000 gap. Your cash has to cover the rest. This example is only for a buyer with 20% down. If you are putting down less than 20%, the numbers work differently, and your mortgage professional can run your exact numbers for you.
Why does this happen in London right now?
An appraisal looks at past sales, so in a market where prices have softened, a price agreed today can sit above what similar homes sold for a few months ago. That matters in London right now. In September 2026, across the London and St. Thomas region, the townhouse benchmark price was $421,500, down 10.0% from a year earlier, and apartment-style homes took a median of 65 days to sell, with 8.3 months of inventory. Those are region-wide figures from LSTAR, not a promise about any one home. But they show why an appraiser may lean on lower recent sales, especially for a townhouse or a condo, where comparable sales can be thinner or softer than for a detached house. Always compare the same type of home with the same type: a townhouse with townhouses, a detached house with detached houses.
Your five options if the appraisal comes in low
1. Cover the gap in cash. If you have the extra money beyond your planned down payment, this is the simplest path. You close at the agreed price, with more of your own cash in the deal.
2. Ask the seller to lower the price. You can ask for a price closer to the appraised value. The seller can say yes, say no, or meet you partway. In a market with plenty of choice, like London has right now, a seller may prefer a lower price to starting over with a new buyer.
3. Split the gap. The seller lowers the price by part of the difference, and you bring the rest in cash. This is often the compromise that saves the deal when neither side wants to absorb the whole amount.
4. Ask the lender to take a second look. If you or your agent spot a clear error, such as the wrong square footage, an upgrade the appraiser missed, or a better comparable sale that was left out, you can ask the lender to reconsider, with documents to support it. A second appraisal is also possible in some cases, but only with the lender's permission, and the lender decides whether to accept it. This is not a guarantee, it is a request with evidence.
5. Walk away, but only if your offer protects you. If your offer included a financing condition, which is a written condition that says the deal depends on getting satisfactory financing, a low appraisal can give you the right to exit and, in general, get your deposit back under the terms of that condition. If you waived that condition to make your offer stronger, walking away is much harder, and you could risk your deposit. This is why the conditions in your offer matter so much, and why they should never be waived without understanding exactly what you are giving up.
What if you are the seller?
If you are selling and the buyer's appraisal comes in low, you have the same choices from the other side: lower the price, split the gap, or hold firm and risk losing the buyer. The best protection for a seller is pricing from real comparable sales of the same type of home, not from the highest price you hope for. In September 2026, homes across the region sold at an average of about 97% of their asking price, which tells you that overpricing usually gets corrected, either by buyers, by time on the market, or by an appraisal.
Three simple steps before you offer
First, ask your agent to show you recent comparable sales of the same type of home, in the same area, before you sign. Second, keep your financing condition unless you fully understand the risk of waiving it and have the cash to cover a gap. Third, keep a small cash cushion beyond your down payment and closing costs, if you can, so one surprise number does not end your purchase.
A low appraisal feels like bad news, but it is really information. It tells you what the market evidence says your home is worth today. With that information, you can renegotiate, bring extra cash, or walk away protected, instead of overpaying in silence.
If you are buying or selling in London, Ontario and want help reading the comparable sales before you offer, we would be glad to walk through them with you, in plain words, with no jargon.
— Paola Cano & Jose Ramirez, Thrive Realty Group Inc., Brokerage, London, Ontario.
Paola Cano is a Real Estate Broker, and Jose Ramirez is a Sales Representative, with Thrive Realty Group Inc., Brokerage, serving London, St. Thomas and surrounding areas.