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The appraisal, and the gap
A buyer’s lender orders an appraisal to check the price against closed sales. Where 60% of homes sell over asking, a winning offer can run ahead of the sales an appraiser has to work with. Here’s how the appraisal works, what a gap costs and how buyers and sellers plan for it.
How it worksOver asking by cityGap calculatorIf it comes in low
- sold over asking60%Silicon Valley, Jan 2024–Sep 2026
- median overbid$112K6.9% over list, among those sales
- top 10% of overbids$422K+over the final list price
- most often over asking73%Sunnyvale, the highest share of any city
how it works
How an appraisal works
- step01
The lender orders it
Once the offer is accepted, the buyer’s lender orders the appraisal, and the appraiser reports to the lender.
- The buyer usually pays for it as part of the loan costs.
- Neither agent chooses the appraiser.
- step02
The appraiser visits
They measure the home, note its condition, updates and features, and photograph it.
- Have permits, a dated list of upgrades with costs, and any HOA documents ready.
- Make every room, the attic access and the yard easy to reach.
property nerd tipAgents may share facts about the home with the appraiser, such as upgrades and when they were done, and anyone may ask for a factual error to be corrected. Pressing an appraiser toward a value breaks federal rules; the appraiser alone picks the sales. - step03
The appraiser picks comps and adjusts them
Closed sales, as close and as recent as possible, each adjusted for its differences from the home, the same way a CMA works.
- At least three closed sales; homes for sale and in contract can support them.
- Adjustments for size, lot, bathrooms, condition and time, laid out on a standard form.
- step04
The report goes to the lender
The lender lends on the lower of the price and the appraised value.
- If the appraisal meets the price, the loan goes ahead as planned.
- If it comes in low, the buyer and the seller have choices; see below.
over asking by city
How often homes sell over asking, city by city
An appraiser works from closed sales, not from this week’s bids. The more often homes sell over asking, the more often a price can run ahead of the comps.
| Area | Sales | Sold over asking | Median overbid | Top 10% overbid | Median % over list |
|---|---|---|---|---|---|
| Silicon Valley | 42,103 | 60% | $112K | $422K+ | 6.9% |
| Santa Clara County | 30,737 | 60% | $104K | $419K+ | 6.5% |
| San Mateo County | 11,366 | 59% | $143K | $431K+ | 8.1% |
| Sunnyvale | 2,269 | 73% | $187K | $550K+ | 9.4% |
| South San Francisco | 791 | 72% | $110K | $262K+ | 9.6% |
| Daly City | 1,098 | 70% | $102K | $256K+ | 10.1% |
| Millbrae | 396 | 68% | $196K | $480K+ | 10.9% |
| Cupertino | 908 | 68% | $202K | $591K+ | 8.5% |
| Santa Clara | 1,877 | 67% | $145K | $417K+ | 8.6% |
| Milpitas | 1,077 | 66% | $77K | $260K+ | 5.9% |
| Belmont | 535 | 66% | $188K | $513K+ | 7.9% |
| Mountain View | 1,428 | 65% | $128K | $464K+ | 7.4% |
| Palo Alto | 1,352 | 62% | $287K | $733K+ | 8.1% |
| Los Altos | 898 | 61% | $372K | $1M+ | 9.1% |
| San Jose | 15,337 | 61% | $87K | $300K+ | 6.1% |
| Campbell | 863 | 61% | $129K | $395K+ | 7.5% |
| Saratoga | 774 | 60% | $240K | $625K+ | 6.4% |
| San Bruno | 719 | 60% | $102K | $267K+ | 7.7% |
| Redwood City | 1,493 | 59% | $132K | $394K+ | 7.1% |
| San Carlos | 821 | 59% | $188K | $502K+ | 8.3% |
| Foster City | 632 | 59% | $100K | $302K+ | 5.8% |
| San Francisco | 12,759 | 59% | $200K | $610K+ | 13.4% |
| San Mateo | 2,194 | 58% | $152K | $445K+ | 8.9% |
| Burlingame | 569 | 58% | $252K | $630K+ | 9.7% |
| Menlo Park | 975 | 53% | $177K | $589K+ | 6.8% |
| East Palo Alto | 247 | 51% | $52K | $176K+ | 5.9% |
| Monte Sereno | 104 | 50% | $314K | $757K+ | 6.1% |
| Gilroy | 1,024 | 44% | $25K | $100K+ | 2.3% |
| Morgan Hill | 1,234 | 44% | $50K | $168K+ | 3.4% |
| Los Gatos | 1,352 | 43% | $114K | $400K+ | 4.9% |
| Los Altos Hills | 240 | 42% | $205K | $700K+ | 4.0% |
| Hillsborough | 306 | 40% | $353K | $861K+ | 6.0% |
| Portola Valley | 197 | 40% | $203K | $507K+ | 4.8% |
| Atherton | 201 | 38% | $405K | $2M+ | 6.3% |
| Woodside | 192 | 27% | $124K | $686K+ | 4.0% |
January 2024 – September 2026. Houses, condos and townhomes; repeat records removed (San Francisco is the city alone). The overbid is the closing price minus the final list price, among sales that closed over it. Every year and price band: How Much Over Asking.
appraisal gap
What a low appraisal costs the buyer
Enter a price, an appraised value and the down payment you planned. The lender lends on the lower number, so the gap comes out of the buyer’s cash.
Cash at this appraisal
if it comes in low
Five ways a low appraisal plays out
- The buyer covers the gapPays the difference in cash on top of the down payment. In multiple offers, some buyers promise in the offer to cover a gap up to a set amount.
- The seller lowers the priceTo the appraised value, or part of the way.
- They split itThe seller gives up part, the buyer brings part.
- A reconsideration of valueThe buyer asks the lender, before closing, to have the appraiser look again. On Fannie Mae and Freddie Mac loans that’s one request per appraisal, with up to five other sales. It helps most when the report has a factual error or missed a better sale.
- The buyer cancelsWith an appraisal contingency still in force, the buyer can cancel. Without one, walking away can put the deposit at risk.
Your purchase contract sets the contingency deadlines. Read yours and ask your agent and lender; this isn’t legal advice.
plan for it
How sellers and buyers plan for the appraisal
Sellers
- Price with the comps in mindA price far above the closed sales can draw buyers and still fall short at appraisal.
- Document the upgradesDates, costs and permits for every major project, ready for the appraiser.
- Read the financing in each offerDown payment, loan type and any gap coverage matter as much as the price.
- Know a cash offer skips itNo lender, no required appraisal, though some cash buyers order one anyway.
Buyers
- Set a gap budget before you bidUse the calculator above: how much cash you could add if the appraisal comes in low.
- Run the comps on the homeThe Comps Finder shows what the closest recent sales support.
- Decide on the appraisal contingencyKeeping it protects your deposit; removing it can make an offer stronger. Talk it through with us and your lender.
- Ask your lender about timingWhen the appraisal is ordered and when the report is due against your deadlines.
questions
Questions we hear
Who pays for the appraisal?
Usually the buyer, as part of the loan costs.
Can a seller challenge an appraisal?
Not directly. The appraiser works for the buyer’s lender, and the borrower is the one who asks the lender for a reconsideration of value. On Fannie Mae and Freddie Mac loans that’s one request per appraisal, with up to five other sales, before the loan closes. The listing agent can send the buyer’s agent sales worth including.
Can the lender skip the appraisal?
Sometimes, on smaller loans. Fannie Mae can offer “value acceptance” (once called an appraisal waiver), and the lender decides whether to use it. It isn’t available when the price or value is $1 million or more, and 81% of Silicon Valley sales from January 2024 through September 2026 closed at $1 million or more. Jumbo lenders set their own rules.
Do cash buyers need an appraisal?
No lender means no required appraisal. Some cash buyers order one anyway as their own check.
Is an appraisal the same as a home inspection?
No. An appraisal estimates value for the lender; an inspection checks the home’s condition for the buyer.
What if the appraisal comes in over the price?
The lender still lends on the price, the lower number. The buyer simply starts with more value than they paid, on paper.
Does selling over asking mean a low appraisal?
Not by itself. A list price is a strategy, and many homes are listed below what recent sales support. A gap shows up when the price runs ahead of the closed sales.
How often do homes here sell over asking?
60% of Silicon Valley sales from January 2024 through September 2026 closed over the final list price, with a median overbid of $112K (6.9%). In Sunnyvale it was 73%; in Woodside, 27%.
more to learn
Keep going
- What’s my home worth?An instant estimate, then a Property Nerd checks it against your street.
- Comps FinderThe eight closest sales to your home from the last 180 days, adjusted to your size and lot, live.
- Home Equity CheckYour purchase price at your city’s pace, minus what you owe, with what selling would cost.
- Home ValuationMarket, list, appraised, assessed and online values: who sets each and which one matters when.
- Comparative Market AnalysisHow an agent picks comps, adjusts them and turns them into a price range.
- The Three Approaches to ValueSales comparison, cost and income, with calculators for the last two.
- Online Home Value EstimatesWhat a formula sees and misses, with a live look at one city’s price spread.
- Then & Now CalculatorWhat a price from any year since 2012 is worth now, by city.
- How Much Over AskingThe Silicon Valley overbid in dollars, by year, city and price band.
- Inspection DecoderWhat the findings in an inspection report mean and what they cost.
Estimates and examples for discussion only; not an appraisal, and not tax, legal or lending advice. Sales data: MLS via IDX, deemed reliable but not guaranteed. Equal Housing Opportunity.
talk to a property nerd
Buying or selling where the appraisal matters?
We’ll pull the comps the appraiser will see and help you plan for a gap before it happens. Commissions are negotiable, and we offer bundled services, so ask us what’s included.
Eric & Janelle Boyenga
Realtors DRE01254724 / 01254725
Realtors DRE01254724 / 01254725