What Happens If the Appraisal Comes in Low on a Woodland Hills Home?

Jonathan Lopez, Woodland Hills Realtor | Jim Sandoval Group | CA DRE #02282844 · Updated September 2026

Woodland Hills isn't a runaway seller's market right now, but it isn't a pushover buyer's market either. Redfin rates it "somewhat competitive" (a 63 out of 100 Compete Score), and the numbers back that up: over the three months ending June 2026, the average home sold for 99.2% of its list price, 34.5% of homes sold above list price, and the hottest listings sold for about 2% over list and went pending in roughly 21 days. Any time a meaningful share of buyers are offering above list price to win, the lender's appraisal becomes the thing standing between an accepted offer and a closed loan.

Why the Appraisal Matters More Than the Accepted Price

A lender will only finance a loan based on the appraised value of the home, not the price you agreed to pay. If you offer $1,300,000 on a home and the appraisal comes back at $1,270,000, your lender's loan amount is based on $1,270,000, not your offer price. That $30,000 gap has to be covered somehow, either by the seller agreeing to lower the price, by you paying the difference in cash, or by the deal falling apart, depending on what your purchase contract says.

Your Options When the Appraisal Comes in Low

There are four real paths, and which one applies depends on how your offer was written:

1. Use the appraisal contingency. The California Association of Realtors' standard Residential Purchase Agreement includes a default 17-day appraisal contingency period. If the home doesn't appraise at or above the purchase price and you and the seller can't work out a resolution, this contingency lets you cancel the contract and get your earnest money deposit back. (See how the same contingency structure protects your earnest money deposit more broadly.)
2. Renegotiate with the seller. Sellers in a market where a third of homes are already selling above list often still prefer to keep a deal together rather than relist. Asking the seller to reduce the price to the appraised value, or to split the difference, is a normal and frequently successful next step.
3. Request a reconsideration of value. If the appraisal appears to have real errors (wrong comparable sales, missed square footage, overlooked upgrades), your lender can submit a formal reconsideration of value request. It's not guaranteed to change the outcome, but it's a legitimate option when the appraisal looks genuinely off.
4. Cover the gap in cash, if you planned for it. An appraisal gap coverage clause, written into the offer upfront, commits you to covering some or all of the difference between the appraised value and the purchase price, usually capped at a specific dollar amount you choose. This is what lets buyers compete on offers above list price without agreeing to an unlimited, open-ended risk.

The Mistake to Avoid

In a competitive listing situation, some buyers waive the appraisal contingency entirely to make their offer look stronger, without any cap or fallback plan if the appraisal comes back low. That leaves the full gap as an out-of-pocket risk with no ceiling. A gap coverage clause capped at an amount you're actually comfortable paying (say, $15,000 or $25,000) usually gives a similarly competitive offer without that open-ended exposure. The same logic applies to whether to waive the inspection contingency: a capped, planned approach on a genuinely competitive listing beats an open-ended waiver applied to every offer.

Where This Leaves You

None of this means every Woodland Hills offer needs an appraisal gap clause. On a listing that isn't drawing multiple offers, a standard appraisal contingency with no gap coverage is often the right call. The decision comes down to how competitive a specific listing actually is, not a blanket rule. Reviewing recent comparable sales and the listing's likely demand before writing an offer is what turns this from a guess into a real strategy. It's worth pairing this planning with a realistic look at your total closing costs, since any appraisal gap coverage comes out of the same cash you're budgeting for closing.

Offer terms matter beyond just the appraisal contingency. See how offering a seller rent-back can be a real lever in a competitive offer.

Frequently Asked Questions