A low home appraisal could cause a buyer to lose their deposit

When someone uses a loan to help them buy a home, the lender will send an appraiser to estimate the value of the home.

The lender won’t loan more than the amount of the appraisal.

If the home appraises for less than what a buyer offers, the buyer will need to cover the shortfall with an additional cash deposit.

If they don’t have the additional cash, they won’t be able to complete the transaction. They’ll lose the due diligence fee they paid, and depending on timing, possibly their earnest money deposit and any inspection or bank fees they’ve already incurred.

Be sure your realtor does a thorough analysis of recently sold comparable homes before you make an offer.