When the Appraisal Comes In Low: A San Antonio Seller's Playbook

You accepted an offer at $385,000. The option period ended. Two weeks later, the buyer's agent calls: the appraisal came in at $370,000. The buyer wants to renegotiate. You have a decision to make, and the TREC contract already tells you what leverage each side has.

A low appraisal is not automatically a dead deal, and it is not automatically a price cut. What happens next depends almost entirely on which financing addendum the buyer used and what it says about appraised value. Before you respond to anything, pull the contract and read that page.

The Third Party Financing Addendum controls this (TREC 40-11)

Most San Antonio resale deals close with a buyer using conventional, FHA, or VA financing, which means the TREC One to Four Family Residential Contract (Resale) is paired with the Third Party Financing Addendum, TREC form 40-11. That addendum has two separate approval components:

• Buyer approval — creditworthiness, income, debt ratios.
• Property approval — the property must appraise for at least the sales price and satisfy the lender's condition requirements.

Whether the buyer can walk with earnest money depends on which boxes were checked at contract signing.

If the appraisal contingency is intact

Under the standard 40-11, if the property does not appraise at or above the sales price and the buyer timely delivers notice of termination, the buyer gets the earnest money back. The contract does not force the buyer to close at the appraised value. It gives them a right to leave.

If the buyer waived the appraisal contingency

In tighter markets — the 2021 and early 2022 stretch inside Loop 410 was a good example — buyers routinely waived property approval or agreed to an appraisal gap. If the buyer waived, a low appraisal is the buyer's problem, not yours. They either bring more cash to closing or default and lose earnest money.

Read the addendum before you assume anything.

Your four real options

Assuming the buyer has a live appraisal contingency and has sent notice that the value came in low, you have four moves. Any credible response from your side is some version of these.

1. Reduce the price to the appraised value. Cleanest path to closing. You give up the gap in cash. On a $385,000 to $370,000 delta, you net $15,000 less.
2. Hold firm and ask the buyer to bring the difference in cash. Legal, common, and viable only if the buyer has the liquidity and the desire. The buyer's lender will still only finance based on the lower of appraised value or sales price, so any gap comes out of the buyer's pocket on top of the down payment.
3. Split the difference. You come down $7,500, they bring $7,500. This is what most Bexar County deals settle at when both sides want to close and neither wants to eat the whole gap.
4. Let the buyer terminate and relist. Sometimes the right answer, especially if you believe the appraisal was wrong or the buyer was already wobbly. Understand that the next appraisal — for the next buyer using the same or a similar lender — may come in at the same number, because appraisers often pull from the same comp pool.

Any agreed change to price gets papered on TREC form 39-9, Amendment to Contract. Do not rely on emails or texts to modify the sales price.

Requesting a Reconsideration of Value

Before you cave on price, look at the appraisal itself. The buyer's agent should be able to share it, or at least the comparable sales the appraiser used. You are looking for specific, documentable errors:

• Comps pulled from outside the neighborhood or across a school-district boundary. A house in 78209 (Alamo Heights ISD) should not be valued against a comp in 78218 (NEISD) even if they are three miles apart. School district affects value in San Antonio in a way appraisers sometimes flatten.
• Missing recent comps that closed higher. If a house two streets over closed at $392,000 four weeks ago and the appraiser didn't use it, that is a real objection.
• Square footage errors. BCAD's public record and the actual measured GLA sometimes disagree. If the appraiser used the low number, that matters.
• Condition adjustments that ignore recent work. New roof, new HVAC, remodeled primary bath — if these are not reflected in the adjustment grid, flag them with receipts and permits.

A Reconsideration of Value (ROV) is a formal request through the buyer's lender to the appraiser, with better comps and a written explanation. It is not a re-appraisal. The same appraiser reviews the same file with new information and either revises the value or doesn't. Success rates are modest, but on a clear factual error — wrong square footage, wrong bedroom count, missing a legitimate comp — an ROV can move the number.

Your listing agent should prepare the ROV packet. If you are selling FSBO, you can submit comps to the buyer's loan officer directly, but the request has to route through the lender.

When to hold firm versus negotiate

A few factors that should push you toward holding your price:

• You have backup offers at or near the original price. Get them in writing before you play hardball.
• The appraisal has documented errors and an ROV is pending.
• Your carrying cost is low — you already moved out, the note is paid off or nearly so, and another 45 days on market doesn't hurt.
• The buyer has strong reserves and the gap is small relative to their down payment.

Factors that should push you toward accepting a reduction or a split:

• You are already in a new-construction contract in Cibolo or Bulverde and your closing dates are stacked.
• The comps genuinely support the lower number and you were priced aggressively to begin with.
• Multiple houses in your subdivision have closed under list in the last 60 days.
• The buyer is a VA borrower and the appraisal came back with a Notice of Value (NOV) at the lower figure — VA NOVs travel with the property for six months, meaning the next VA buyer sees the same ceiling.

That VA point is important in San Antonio specifically. With JBSA-Lackland, JBSA-Randolph, and JBSA-Fort Sam Houston driving heavy VA loan volume, especially in Converse, Schertz, Universal City, and the far northeast side, a low VA appraisal can effectively cap your price for the rest of the selling season.

What most sellers get wrong

• Treating the appraisal as the market's opinion. It isn't. It is one licensed appraiser's opinion, working from a limited comp set, on a specific date. A buyer willing to pay $385,000 is also market data.
• Refusing to look at the appraisal report. You cannot argue against a number you have not read. Ask for the full report, not just the summary.
• Accepting the first reduction the buyer's agent proposes. The opening ask is rarely the settling point. Counter.
• Amending the contract by email. Every price change needs to be on TREC 39-9, signed by both sides, delivered per the notice provisions. Otherwise your title company will not close at the new number.
• Ignoring the option period timeline confusion. The option period is over by the time the appraisal comes back. The buyer's right to terminate now flows from the financing addendum, not from the option. Different rules, different deadlines.
• Forgetting the seller's disclosure. If the appraisal surfaces something material — foundation movement flagged, roof condition noted — and you did not disclose it, you have a Property Code § 5.008 problem that outlives this deal. Fix the disclosure before the next buyer.

After you decide

Whatever path you take, get the amendment signed within a few days. Appraisal disputes that drag past a week usually kill deals through sheer fatigue. Your title company — most Bexar County closings run through Independence Title, Alamo Title, Stewart, or Texas National — needs the amended figure to redo the closing disclosure, and the buyer's lender needs it to re-issue the loan estimate.

If the deal falls apart and you need to relist, price the next go-around with the appraisal in hand. You now know what at least one appraiser thinks. Adjust accordingly, or be ready to find a cash buyer or a buyer with a waived contingency.

When you are ready to relist or want a second opinion on comps before you respond to a low appraisal, browse active listings and recent sales in your subdivision at /resources, or connect with a San Antonio agent who has handled appraisal disputes at /agents. If you are selling on your own, you can list free at /list-your-home and still get the market data you need to negotiate from a real position.