Blog > Navigating the 30-Day Markham Appraisal Shortfall: What Happens When the Bank Says “No�
Navigating the 30-Day Markham Appraisal Shortfall: What Happens When the Bank Says “No�
by
What happens if my Markham home appraises below the purchase price
If the lender’s appraisal comes in below your purchase price, the bank will usually lend based on the lower value, and you must cover the difference. On a firm deal, a low appraisal does not let you walk away. If you cannot close, the seller can keep your deposit and may claim its losses. The usual options are to challenge the appraisal with recent comparable sales, try a different lender, add more down payment, use secondary financing, or ask the seller to adjust the price. With a typical 30- to 60-day closing, the most important step is to act quickly.
Why Appraisals Fall Short in a Changing Market
An appraiser looks backward. The valuation relies on recent sales of similar homes, adjusted for differences. When prices are moving, those comparables can lag what buyers are paying today. In September 2026, TRREB reported a Markham average price of $1,125,353, down 4.4% from a year earlier, so some comparables from earlier in the year may support a higher value, while others point lower.
Appraisals also tend to come in low when a buyer paid a premium in a competitive offer, when a home is unusual for its street, or when there are few recent sales of similar homes nearby.
Michael John Lau, a REALTOR® with the Kaizen Real Estate Team, one of the most active real estate teams in Markham and York Region, reviews recent sales with buyers before an offer, so the price they agree to is one a lender is likely to support.
What a Firm Deal Means When the Appraisal Is Low
Once an Agreement of Purchase and Sale is firm, the buyer is obligated to close at the agreed price. A low appraisal is the buyer’s financing problem, not a reason to cancel. If a buyer fails to close, the seller can generally keep the deposit and may sue for additional losses, such as a lower price on resale and carrying costs.
| Situation | What usually happens |
|---|---|
| Financing condition still open | The buyer may be able to end the deal under the condition’s terms, or renegotiate |
| Deal is firm | The buyer must close and find the extra funds |
| Buyer cannot close | Deposit at risk, plus a possible claim for the seller’s losses |
This is why a financing condition matters in today’s market. Sellers are more open to reasonable conditions than they were in busier years.
How Much Extra Cash You May Need
Here is an illustration with an uninsured mortgage at 80% of the lender’s value:
| Planned | After a low appraisal | |
|---|---|---|
| Purchase price | $1,300,000 | $1,300,000 |
| Lender’s value | $1,300,000 | $1,250,000 |
| Mortgage at 80% | $1,040,000 | $1,000,000 |
| Down payment needed | $260,000 | $300,000 |
A $50,000 shortfall in value means $40,000 more cash at an 80% loan-to-value ratio. With an insured mortgage, the lender also bases the loan on the lower of the price and the appraised value, so the gap comes from your own funds.
Worried about a low appraisal on a home you like? Call Michael John Lau, REALTOR®, at (416) 700-0286 to review recent sales before you offer.
Step One: Challenge the Appraisal With Better Comparables
- Ask for the report or a summary of the comparables used.
- Gather stronger comparables: recent sales of similar homes on the same or nearby streets, ideally from the last 90 days, with notes on size, lot, updates and condition.
- Point out errors: wrong square footage, missed renovations, or comparables from a less desirable pocket.
- Ask your mortgage professional to request a reconsideration of value, or to try another lender that may use a different appraiser.
A review does not always change the result, but a well-documented request gives you the best chance.
Step Two: Ways to Cover the Gap
| Option | What to know |
|---|---|
| More down payment | From savings, a gift from family, or available registered funds |
| Home equity line on your current home | For move-up buyers who still own their home, if the lender allows it |
| Different lender | Another appraisal or a lender with different policies may help |
| Alternative or private second mortgage | Higher rates and fees, and the first lender may need to approve it |
| Longer closing | More time to arrange funds, if the seller agrees |
Secondary financing can solve a short-term problem, but it adds cost. Plan how and when it will be repaid before you rely on it.
Step Three: Talk to the Seller
A seller is not required to lower the price on a firm deal. Still, a respectful conversation, supported by the appraisal and recent sales, can sometimes lead to a price adjustment or a credit. A seller may prefer a modest reduction to the uncertainty of a failed closing and starting again, especially if the next buyer’s lender is likely to see the same comparables.
Any change must be put in writing as an amendment to the agreement, prepared by the REALTORS® and reviewed by your lawyer.
How to Reduce the Risk Next Time
- Get a full pre-approval and ask your lender how it handles appraisals.
- Review recent comparable sales before you set your price.
- Include a financing condition long enough to complete the appraisal.
- Keep a cash buffer beyond your planned down payment.
- Be cautious about paying well above recent sales in a competitive situation.
Ultimately, the decision is yours. The goal is to make sure you have all the information before your deal becomes firm.
Next Steps
- Buying a home in Markham: how Michael protects buyers from offer to closing.
- Mortgage calculator: see how a larger down payment changes your payment.
- When a pre-construction condo appraises low: a closing guide for new-build buyers.
Frequently Asked Questions
What happens if a home appraises below the purchase price?
The lender will usually lend based on the lower value, so the buyer must cover the difference with more down payment or other financing.
Can I back out of a firm deal because of a low appraisal?
Generally, no. A firm agreement must close. If you fail to close, the seller can usually keep your deposit and may claim further losses.
Can I challenge a bank appraisal?
Yes. Ask your mortgage professional to request a reconsideration of value, supported by recent comparable sales and any errors in the report.
How much extra cash will I need after a low appraisal?
It depends on the loan-to-value ratio. At 80%, a $50,000 shortfall in value means about $40,000 more down payment.
Will the seller lower the price if the appraisal is low?
A seller does not have to, but some agree to an adjustment or credit to avoid a failed closing. Any change must be made in a written amendment.
How can I avoid an appraisal problem?
Base your offer on recent comparable sales, get a full pre-approval, include a financing condition, and keep a cash buffer for surprises.
Work With Michael John Lau in Markham
Michael John Lau helps Markham buyers make offers grounded in recent sales, so the price is one a lender can support. When an appraisal surprise happens, he works with your mortgage professional and lawyer to find a path to closing. The goal is to protect your deposit and your peace of mind.
📞 Contact Michael John Lau, REALTOR®
🌐 www.callmikelau.com
Want your offer backed by solid comparables?
Michael John Lau reviews recent sales on the street before you commit, so there are fewer surprises later.
Michael John Lau, REALTOR® · Markham, Ontario · (416) 700-0286
Disclaimer. Michael John Lau is a licensed REALTOR® serving buyers and sellers in Markham, Ontario and the Greater Toronto Area. Markham figures are from TRREB’s September 2026 Market Watch (October 6, 2026) and September 2025 Market Watch. The financing example is for illustration only. Lender policies vary. Michael John Lau is not a lawyer, accountant, tax advisor or mortgage professional. This article is general information, not legal, tax or financial advice. Speak with a qualified professional about your own situation.