House Valuation Less Than Purchase Price

At Property Price Advice, you can get a free, accurate market valuation of your desired property from a local real estate agent. Choose an expert, provide the property’s address, and share your contact details to book a no-obligation estate agent valuation. We’ll send the necessary information straight to your inbox.

But what if you get a lower appraised value than the price you offered? There’s no need to panic because you have several options.

Read on to learn more about house valuations, how frequently homebuyers in the UK face property devaluations, and what to do if you get one.

Does a house valuation have to match a house’s purchase price?

A house valuation is crucial when buying a real estate property, whether you pay in cash or take out a mortgage. It helps you determine your desired home’s market value to avoid overpaying.

Your lender will require it to approve your loan application, but you can also commission it when paying in cash. Getting a house valuation in the UK will cost you between £150 and £1,500, depending on the property’s location, size, home appraisal option, and the appraiser.

However, hiring a real estate agent to estimate how much a particular property may be worth shouldn’t cost you a penny.

House valuations rarely match properties’ purchase prices, if ever. Many factors can influence a particular property’s market value, which its sale price may not reflect.

For instance, a seller may overprice a property in a buyer’s market, unaware of the lower demand driving down their house’s value. Some may also price an under-maintained home significantly higher.

A similar scenario happens in a seller’s market when bidding wars artificially inflate property prices.

Multiple short sales or foreclosures in the neighbourhood can also negatively affect a particular home’s market price. The same goes for insufficient comparables in a specific location, preventing appraisers from estimating a fair market worth.

Besides local real estate trends and market conditions, inexperienced appraisers can influence property prices. They may be unfamiliar with the ins and outs of the local market, poorly evaluate a house, or fail to gather relevant comparables, ultimately providing an inaccurate valuation.

Home valuations by licensed, experienced professionals are unbiased and consider the latest market conditions, painting a realistic picture to help buyers and lenders understand how much a property may be worth.

How common is it for valuations to be less than the purchase price in England and Wales?

House down-valuations have become more prevalent in the UK over the past few years. The pandemic has caused uncertainty in the housing market, making property estimates more challenging than ever.

According to the UK House Price Index, the median house price in the UK was £286,397 in June 2022 – 7.8% more than in June 2021. That’s a whopping £46,470 more than only a few years ago.

Current UK property prices have already smashed the house price predictions for 2026. Buying a house in England now costs 7.3% more than last year, while home prices in Wales are 8.6% higher.

Rapidly rising prices make it challenging for appraisers to keep up, often causing them to undervalue properties to avoid lawsuits or because they’ve become a shot in the dark.

Increasing house devaluations in the UK

The UK House Price Index data shows that approximately 866,906 out of 1.95 million properties received a down-valuation between 2020 and 2022, causing one in three deals to fall through in 2021.

A 2020 devaluation report revealed that 46% of homebuyers in the UK received a down-valuation from their mortgage lender. Wales had the most devaluations (63%), while 45% of prospective buyers in England faced the same problem. As for the city-related data, London was leading with 59% of down-valuations.

Most devaluations were regarding homes between £400,000 and £500,000.

Appraisers undervalued 44% of the properties by £5,000 to £10,000. Nearly a fourth (24%) of buyers received a house valuation of £10,000 to £20,000 less than the agreed-upon purchase price. Devaluations of up to £240,000 weren’t unusual either.

At Property Price Advice, you can get a free house valuation to gain insight into the local market’s conditions before making an offer on a property and eliminate unwanted surprises.

Our online valuation tool pulls up-to-date data from HM Land Registry and considers relevant comparables to determine your desired home’s accurate market value in minutes. It can help you understand what to expect and make an educated decision.

What happens when a house valuation is lower than the purchase price?

A down-valuation that wouldn’t make a massive dent in your wallet may not be a deal-breaker if you plan on paying in cash. Of course, consulting an expert before signing the contract is crucial to avoid overpaying.

However, you might have to explore other options if your mortgage house valuation is lower than the offered price, such as covering the difference out of pocket.

Your mortgage lender will use the appraised value to calculate your LTV (Loan-to-Value) ratio and provide a suitable loan.

The maximum LTV ratio you can get in the UK to finance a home is 95%, while the minimum is 60%. Anything lower means application denial. The good news is the average LTV for first-time homebuyers is 82%.

Your lender doesn’t care about the purchase price you’ve agreed to; their goal is to reduce the risk of approving your loan. For instance, they want to quickly resell the property at a higher price and recoup the outstanding loan amount if you default on your mortgage. They might lose money by lending you more than you may need.

That’s why you probably won’t get 100% financing. You can get a high LTV ratio, which means higher interest rates because your lender considers the investment risky.

What are the buyer’s options if a house valuation is less than the purchase price?

Getting a lower appraisal than you hoped as a buyer might be a snag, but it doesn’t have to put a brake on your plans. Here are some of your options.

  • Negotiating a better mortgage

You can ask your lender to reconsider your mortgage deal, increasing the LTV ratio to help you cover more of the property’s cost.

This solution may not be feasible with every lender. Few will agree to a higher LTV ratio because most don’t want to take on more risk. Giving you funds above the market price might jeopardise your lender’s business because you can’t guarantee you’ll repay your loan.

However, getting more financing means paying higher interest rates. Put everything on paper to determine if you can afford higher monthly mortgage payments before persuading the lender to change their decision. Ensure a higher loan won’t deplete your savings.

  • Increasing your down payment

When a house valuation is lower than the offered price, mortgage applicants must make a specific down payment to cover the remaining amount unless the seller agrees to match the appraised value.

The good news is you can choose the amount to pay upfront. Providing more money as a down payment will lower your LTV and interest rate.

You can make up the entire difference between the purchase price and the appraised value or pay more to get a better mortgage deal. Of course, you must have sufficient savings.

Let’s say you offered £120,000 for a property, but your lender’s appraiser valued the home at £100,000. You would have to cover the remaining £20,000 out of pocket.

However, if you increase your down payment to £30,000, you would need to borrow £90,000, driving your LTV ratio down to 75% instead of 83.3% and reducing your interest rate.

This option is excellent if your lender denies your loan application. They’ll likely lend you the necessary funds if you offer a higher down payment to cover more than the difference between the purchase price and the appraised value.

  • Finding another mortgage lender

You can find another mortgage lender if the current one has provided a down-valuation and the options above are out of the question.

Another lender may provide a valuation that works in your favour, helping you secure a better mortgage deal and keep more money in your wallet while finally getting your dream home.

However, there’s no guarantee they’ll provide a different appraisal. Moreover, the new lender may collaborate with the same appraiser, who will likely deliver an identical report. You might lose precious time without getting a more favourable result.

Let’s not forget about additional expenses. Applying with another lender means paying application and valuation fees again – perhaps to get the same result.

There’s also the problem of another credit check. You might want to consider a lender who offers pre-approval to avoid hurting your credit score with another inquiry.

Can a buyer back out if a house valuation is lower than the purchase price?

A buyer can back out of the real estate deal due to a home devaluation only if they’ve previously signed a home appraisal contingency. That’s a provision in the purchase contract allowing them to cancel it in case of a down-valuation.

Signing this contingency protects you as a buyer since you won’t breach your contract if you back out of the deal.

However, walking away means losing your earnest money or the so-called good faith deposit. That’s the percentage of the purchase price you might need to pay to show you’re serious about buying the home. It’s not a requirement, but it’s standard in competitive markets.

Homebuyers in the UK are increasingly waiving an appraisal contingency because they’re currently buying in a seller’s market. House prices keep soaring, bidding wars are reaching new heights, and buyers want to make more attractive offers to land their dream homes.

However, waiving it for fear of missing out may be unwise. What if an unexpected circumstance prevents you from completing the purchase? You could breach your contract and lose the deposit.

This provision is also valuable if you and the seller unilaterally agree to cancel the contract. That situation means getting back your earnest money.

Can a buyer pay over the house’s appraised value?

Nothing prevents a buyer from paying over the property’s appraised value. Whether you’re an all-cash buyer or want to take out a mortgage, you can cover the difference in cash. You can bridge the gap with enough savings to match the purchase price.

Is it wise to pay more than the appraised value? It can be in some situations.

You can pay more if you urgently need to buy a home and don’t want to lose one you’ve been eyeing for a while. Purchasing in a seller’s market means having limited opportunities, especially now when bidding wars keep increasing already rising prices.

You could build home equity quickly if the property prices in that area keep increasing, making your purchase worth it.

However, purchasing a home should never be a hasty decision; you wouldn’t want to rush and overpay for a property not worth the money.

That’s why evaluating your budget is critical. Paying over the appraised value shouldn’t cost you an arm and a leg in the long run, primarily if you’re taking out an already high mortgage.

At Property Price Advice, we can help you determine how much you can afford to spend on a new home. Our free online Budget Calculator can provide an approximate estimate within minutes and help you plan your finances.

Your budget estimate report will also include properties in your desired area matching your criteria, including new home developments. We’ll also throw in top deals from our reputable mortgage partners at Shop Around Finance, who can provide you with free mortgage advice.

Can the buyer renegotiate the purchase price?

A lower home appraisal than you expected gives you significant negotiating power as a buyer. You can renegotiate the purchase price with the seller, asking them to match the property’s appraised value or meet somewhere in the middle.

That often bears fruit because many sellers want to seal the deal quickly. They don’t want to get the short end of the stick, but they understand that lowering the price helps the buyer obtain the necessary financing and complete the contract.

Others agree to lower the price because the valuation report brings them down to earth. Whether they had no insight into the local market conditions or thought their property was worth more, a fact-based appraisal gives them a realistic view and compels them to match the appraised price.

Refusing to budge might cause the seller to lose many prospective buyers whose lenders and appraisers disagree with the purchase price. That’s why renegotiating the deal is the best step that could benefit both parties.

However, some sellers may not be so flexible if you pay in cash and don’t rely on a mortgage. Even if you count on a loan, they might take their chances of getting a more attractive offer. After all, another buyer’s appraiser could provide a higher valuation.

Still, being unwilling to lower the price is risky for sellers, giving buyers an edge when renegotiating a deal.

What are the seller’s options if a house valuation is less than the purchase price?

Real estate investors and homeowners have several options when their house valuation shows a lower market value than the purchase price.

  • Renegotiating the deal

Most sellers persuade buyers to cover the difference in cash if their lender doesn’t provide a better mortgage. Many leverage comparables in the area to showcase their property’s worth the purchase price.

The same goes for all-cash buyers who commission a house valuation to ensure they don’t overpay.

  • Lowering the price

You’ve seen above how lowering the price can benefit sellers, so many agree to do it. However, they may not always match the appraised value.

Many sellers will meet a buyer in the middle. For instance, a property’s appraised value is £180,000, but its purchase counterpart is £200,000. The seller may agree to lower the home sale price by £10,000, helping the buyer reduce out-of-pocket expenses.

  • Accepting the lower offer

Some sellers accept a lower offer, matching the appraised value without negotiation. They do it because of an eye-opening valuation report or to close the deal quickly.

A buyer doesn’t have to show the valuation report, but it might compel the seller to reconsider their price. A seller may also request to see it to ensure everything is in order.

  • Finding a new buyer

Letting the buyer walk out of the deal isn’t uncommon, especially when multiple prospective buyers show interest in a specific property.

Many sellers who aren’t in a rush prefer buyers to cancel the contract if an appraiser values their property lower than the agreed-upon price. That enables them to find others who won’t have a problem with the listing price. They can also wait for comparable properties in the area to sell at a similar price, driving their home’s value higher.

  • Offering seller financing

Homeowners and investors who aren’t in a rush to sell can offer seller financing. It’s a brilliant way to complete a real estate transaction when a house valuation is lower than expected. They can finance the difference, enabling the buyer to provide regular payments to repay the loan.

This option is excellent for buyers who can’t get a mortgage because of low credit scores or no credit history. It typically involves a lawyer to ensure both parties respect the arrangement.

Can the buyer or seller appeal if the house valuation is less than the purchase price?

The buyer or seller can challenge the appraisal if they believe it’s inaccurate or incomplete. They must have evidence that the property is worth more than the appraised value or that the appraiser didn’t thoroughly assess the home.

For instance, they may have overlooked essential property features, such as recent upgrades that added more value. They may have excluded critical market conditions, comparable sold house prices in the area, pending sales, or economic factors.

Gathering the necessary evidence to dispute the appraisal is crucial; the lender needs it to consider the appeal. It should include relevant local market data, receipts, information on comparable properties in the neighbourhood, and anything else showing the appraiser’s job wasn’t complete.

Once the buyer or seller prepares the necessary documentation, they must write a letter of appeal and send it to the lender.

Can the buyer or seller request a second valuation if the first valuation is less than the purchase price?

The buyer or seller can request a second home valuation if the first one shows a lower market price than its purchase counterpart.

They don’t have to dispute the initial appraisal first; they can do it if they believe another appraiser will take a more professional approach. Again, they must provide fact-based data instead of merely stating that the report contains misinformation.

Don’t worry about the contingency if you or the seller request a second valuation; you can always extend it to have more time for another appraisal.


Buying a house requires thorough research, especially in a highly-competitive seller’s market. A local real estate agent is your best ally who can guide you through the process and help you secure your dream home, even if you get a devaluation.

A devaluation doesn’t need to mean losing the deal. It opens the door to renegotiation that could reduce the purchase price and help you stay within budget.

Remember that house valuations don’t uncover potential problems, such as structural faults or hidden issues that could cost a small fortune to repair. They only show how much a specific home may be worth.

Consider getting a house valuation survey to determine if the property you’re eager to buy is worth it. It will provide an in-depth assessment of the house, helping you make an informed decision.