Appraisal Guide: Appraisal Packages, Low Appraisals & Gap Clauses
Updated: Sep 27
Quick links: Appraisal Adjustments Guide (pricing cheat sheet) • Low appraisal tips are at the bottom of this page.
An appraisal package is a collection of accurate, organized information provided to the appraiser to help them understand the property, the transaction, and any features or improvements that may affect value.
The purpose is not to tell the appraiser what the property should be worth or to pressure them toward a particular conclusion. The goal is to make sure the appraiser has convenient access to relevant facts that may not be obvious during a brief property visit.
A strong appraisal package helps the listing agent advocate for the property professionally while respecting the appraiser’s independence.
Why Is an Appraisal Important?
When a buyer is obtaining financing, the lender typically orders an appraisal to develop an independent opinion of the property’s market value.
The appraiser generally considers factors such as:
The property’s location
Size, condition, and layout
Lot size
Bedrooms and bathrooms
Improvements and updates
Recent comparable sales
Current market conditions
Features that may add value
Conditions that may affect marketability
The appraisal can affect whether the lender will finance the purchase at the agreed-upon price. A low appraisal may require the parties to renegotiate, challenge the appraisal, adjust financing, bring additional funds to closing, or terminate the transaction depending on the contract.
Why Offer an Appraisal Package?
An appraiser may inspect several properties in a week and may only spend a limited amount of time at each home. They also may not know the property’s full history, the details of recent improvements, or the reasons certain comparable sales are more relevant than others.
An appraisal package can help by:
Organizing the property information in one place
Identifying improvements that may not be immediately visible
Providing documentation for major upgrades
Highlighting features that distinguish the property
Sharing relevant comparable sales
Explaining unusual property characteristics
Reducing the chance that important information is overlooked
Helping the appraiser complete a thorough and informed analysis
Providing the package does not guarantee a particular value. The appraiser decides what information is relevant and independently determines the opinion of value.
What Should Be Included in an Appraisal Package?
1. Property Feature Sheet
Begin with a concise overview of the home, including:
Property address
List price
Contract price, when appropriate
Property type
Bedrooms and bathrooms
Above-grade square footage
Lot size
Garage and parking information
Basement details
Year built
School district
Tax information
Important property features
Make sure every fact is accurate and supported by reliable information.
2. List of Improvements and Updates
Provide a clear list of improvements, ideally with the approximate year completed.
Examples may include:
Roof replacement
Windows
HVAC systems
Electrical panel
Plumbing or sewer work
Kitchen renovation
Bathroom renovation
Flooring
Appliances
Siding
Driveway or patio
Basement improvements
Landscaping or drainage work
Separate routine maintenance from significant improvements. Fresh paint or basic repairs may improve presentation, but they do not necessarily contribute the same value as a new roof, updated kitchen, or major mechanical system.
Avoid exaggerating costs or claiming that an improvement adds dollar-for-dollar value.
3. Receipts, Permits, and Supporting Documentation
When available, include copies of:
Contractor invoices
Paid receipts
Permits
Warranties
Architectural plans
Surveys
Documentation for major systems
Municipal approvals
Only provide documents that are relevant and accurate. Protect private information by removing account numbers, payment details, or other sensitive information.
4. Comparable Sales
The listing agent may provide recent comparable sales that appear relevant to the property.
Good comparables are generally similar in:
Location
Property type
Size
Age
Condition
Lot characteristics
Bedroom and bathroom count
Garage or parking
Basement type
Date of sale
Include a brief explanation of why each comparable may be useful. Do not overwhelm the appraiser with a large stack of unrelated sales simply because their prices are high.
The appraiser is not required to use the comparables provided by the agent.
5. Pending and Active Listings
Pending and active listings can provide context about current competition and market direction, although closed sales generally provide stronger evidence of value.
These listings may help demonstrate:
Current buyer expectations
Competing inventory
Price trends
Limited availability of similar properties
How the subject property compares with homes currently on the market
Clearly identify whether each property is active, pending, contingent, or closed.
6. Multiple-Offer Information
When permitted and appropriate, the listing agent may provide factual information about the level of market interest, such as:
Number of offers received
Number of showings
Days on market before going under contract
Open-house attendance
Whether the property sold above or below list price
Do not disclose confidential details about other buyers or provide information that has not been authorized for disclosure.
Multiple offers do not establish value by themselves, but they may help demonstrate market demand.
7. MLS Listing and Marketing Materials
Include the MLS listing sheet and, when useful:
Professional photographs
Floor plans
Survey
Brochure or feature sheet
Virtual-tour information
Detailed room descriptions
These materials can help the appraiser review the property after the inspection and confirm features that may not have been fully documented during the visit.
8. Information About Unique Property Features
Some features require explanation because they are not obvious or are difficult to compare.
Examples include:
An additional lot
Accessory dwelling unit
Finished basement
Solar panels
Extensive outdoor improvements
Unusual zoning
Waterfront or creek access
Recent additions
Specialized energy-efficiency improvements
Private well or septic system
Flood-zone considerations
Easements or shared driveways
Provide facts and supporting documents without minimizing concerns or making unsupported claims.
9. Offer or Contract Information
The appraiser usually receives the executed contract through the lender or appraisal management process. The listing agent should still be prepared to confirm that the appraiser has the correct agreement and any relevant addenda.
Do not provide misleading explanations of concessions, credits, personal property, or contract terms. These items may affect the appraiser’s analysis.
How Should the Package Be Presented?
The package should be professional, concise, and easy to review.
A useful order is:
Cover page
Property feature sheet
Improvement list
Supporting receipts or documentation
Comparable sales
Active and pending market information
MLS sheet and marketing materials
Survey, floor plan, or other relevant documents
Use clear headings and avoid unnecessary pages. A focused package is often more useful than a large binder filled with marginally relevant information.
The package may be provided electronically or in print, depending on the appraiser’s preference and any applicable procedures.
How Should the Agent Communicate With the Appraiser?
The listing agent should be available, professional, and respectful.
The agent may:
Provide access to the property
Answer factual questions
Point out improvements and important features
Offer the appraisal package
Explain where supporting documentation can be found
Provide relevant market information
The agent should not:
Demand a particular value
Attempt to influence or intimidate the appraiser
Misrepresent improvements or property conditions
Hide known defects
Tell the appraiser which sales must be used
Suggest that future business depends on the appraisal result
Make unsupported claims about value
A helpful introduction might be:
“I prepared a brief package with the property features, documented improvements, and several nearby sales that may be useful. Please use whatever information you consider relevant.”
What Happens After the Appraisal?
The listing agent generally does not receive the appraisal directly from the appraiser. The appraisal is prepared for the lender, and the buyer typically receives a copy through the lending process.
When the appraisal supports the contract price, the transaction can usually continue through underwriting.
When the appraisal is lower than the contract price, the parties should review:
The appraisal contingency
The appraised value
The comparable sales used
Any factual errors
The lender’s reconsideration-of-value process
The buyer’s available funds
Possible renegotiation options
A reconsideration request should focus on specific factual errors, overlooked features, or relevant market data, not disappointment with the result.
The Agent’s Responsibility
An appraisal package is one of the ways a listing agent can prepare for a successful transaction. It demonstrates that the agent understands the property, has reviewed the market, and is ready to provide accurate information when requested.
The best appraisal packages are not sales pitches. They are factual, organized, relevant, and respectful of the appraiser’s independent role.
Preparing the package does not guarantee the contract price will be supported. It does, however, help ensure that the property’s important features, improvements, and market context are clearly presented rather than left to chance.
When the Appraisal Comes In Low: Tips for Listing & Buyer Agents
Seller
When working with the seller your job as the listing agent is to help ensure the appraisal comes back as high as possible. To do this I recommend that you physically go to the appraisal with comps showing your value in hand. Chat with the appraiser. A good conversation can go a long way.
Should the appraisal come back lower then the contract price there are a few things that can happen.
The buyer can come up with the difference (you can negotiate an agreeable new price point OR your client can hold firm and say “we agreed to a price, we are sticking to it. If your client goes with the “we are sticking to it” method remember that the buyer does have the right to cancel if appraisal comes in low (unless their is an appraisal gap addendum “Appraisal Gap Addendums explained below.”
The seller can agree to sell for the new appraised for price.
You can talk to the lender and broker and ask for a new appraisal. Sometimes this works out, sometimes it does not. It is a gamble.
One way to help protect the seller in this situation is an appraisal gap clause. This states that should the appraisal come in low, the buyer will make up the difference to a certain agreed to point. For example, you may have a contract for $100,000. If the appraisal comes back at $90,000 and you had the Appraisal Gap Clause in the contract which states the buyer will come up with the difference up to $15,000, the buyer would have to come with the $10,000 difference. However, if the appraisal came back at $80,000 the buyer would only need to come up to $95,000 as the clause states up to a $15,000 difference.
Buyers
When working with the buyer, typically an appraisal is scheduled through the listing agent. I generally ask to be looped in the process so I can be sure that the listing agent is going to show up. If not, I like to be there if possible so I can get a feel for the appraisal and offer any opinions I can.
Should the appraisal come back low, the buyer has a few options.
In most contracts (unless specifically mentioned otherwise) if an appraisal comes in low, the buyer has the right to cancel.
You can try to renegotiate a price. Your client can say they are only willing to pay appraised value or only go to a certain point, and see if you can get a deal.
In some situations it may seem odd, but if your client is very interested in a property or you are in a sellers market with multiple offer situations, you may consider these options.
Your client can just pay the appraised value.
You can ask the lender for a second appraisal because you don’t agree with the first.
You can add an appraisal gap clause. This states that should the appraisal come in low, the buyer will make up the difference to a certain agreed to point. For example, you may have a contract for $100,000. If the appraisal comes back at $90,000 and you had the Appraisal Gap Clause in the contract which states the buyer will come up with the difference up to $15,000, the buyer would have to come with the $10,000 difference. However, if the appraisal came back at $80,000 the buyer would only need to come up to $95,000 as the clause states up to a $15,000 difference.
More appraisal resources
Appraisal Adjustments Guide: Rick's cheat sheet for comps and adjustments
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