A low home appraisal could put you in a negative equity position

One other implication of a low home appraisal is negative equity.

If the home appraises for less than what a buyer offers, the buyer would be in a theoretical negative equity position - where the value of the home is less than what they paid for it.

If they need to sell the home in a year because of a job loss or some other event, they could end up losing money on the home.

I say theoretical negative equity, because it could be a situation where you just have a bad appraisal. The appraised value is subjective.

It’s definitely something to think about before making an offer on a home that has a higher likelihood of being above the appraised amount