Chico, CA Home Appraisal Process: If It Comes In Low

Answer Capsule: In Chico, CA, your lender orders a licensed appraiser to inspect the home and compare it to recent comparable sales, usually within a week or two after your offer is accepted. Under the standard California purchase agreement, buyers have 17 days after acceptance to remove the appraisal contingency. If the home appraises below the purchase price, you generally have three options: renegotiate the price with the seller, cover the difference in cash, or cancel the contract and get your deposit back if the contingency is still active.

What Happens During a Home Appraisal?

Once your loan is in process, your lender orders an appraisal from a licensed, independent appraiser. The appraiser is not chosen by you or your agent, and they don't have contact with either side's agent about the outcome; the assignment goes through a neutral management system to keep the process objective.

The appraiser visits the property in person, walks through the home, and notes its condition, size, layout, and any upgrades. They then compare it to recent sales of similar homes nearby, usually within the last several months, to arrive at an opinion of value. That value determines how much the lender is willing to lend, regardless of what you agreed to pay.

How Long Does the Appraisal Process Take in Chico?

Most appraisals are scheduled within a few days of being ordered, with the full report typically delivered within one to two weeks. Under California's standard purchase agreement (the C.A.R. RPA), the appraisal contingency defaults to 17 days after acceptance, the same window as the inspection contingency. That timeline can run tighter than it sounds once you factor in scheduling an appraiser and waiting for the report, so it's worth confirming the appraisal is ordered early in escrow.

For jumbo loans, which cover higher price points more common in parts of Butte County's upper price tier, the appraisal can take longer to schedule, and it's common to request an extension on the loan contingency to cover it.

What Happens If the Appraisal Comes In Low?

A lender will only finance the home up to its appraised value, not the higher price you agreed to pay. If the appraisal comes in below the purchase price, that gap has to be covered somehow before the sale can close as originally written. You generally have three paths:

• Renegotiate the price. Your agent can go back to the seller and ask them to reduce the price to match the appraisal, or split the difference.
• Pay the difference in cash. If you can cover the gap between the appraised value and the purchase price out of pocket, the sale can move forward as written.
• Cancel the contract. If the appraisal contingency is still active and you can't or don't want to cover the gap, you can cancel and get your earnest money deposit back.

Low appraisals tend to show up more often in competitive situations where the winning offer came in above the list price, since the appraiser is working from recent comparable sales rather than what buyers were willing to offer.

Can You Dispute a Low Appraisal?

Yes, though it isn't guaranteed to change the outcome. Your lender can submit a formal request, often called a reconsideration of value, asking the appraiser to review additional comparable sales that may not have been considered the first time. This works best when there's a clear, factual case, like recent closed sales the appraiser missed, not just a disagreement with their judgment. In some cases, a second appraisal can be ordered, though that depends on the lender and comes with an added cost.

FAQ

How much does a home appraisal cost?
In California, a standard home appraisal typically runs in the $400 to $600 range, though it can be higher for larger or more complex properties. The buyer usually pays this as part of their closing costs.

Who chooses the appraiser?
Neither the buyer's agent nor the seller's agent selects the appraiser. The assignment is routed through the lender to an independent appraiser to keep the process unbiased.

Does a low appraisal always kill the deal?
No. Many low appraisals get resolved through renegotiation or the buyer covering part of the gap. Whether the deal falls through usually comes down to how much of a gap there is and whether either side is willing to move.

Is the appraisal contingency the same as the loan contingency?
No, they're separate. The appraisal contingency protects you if the home appraises below the purchase price; the loan contingency protects you if you can't secure financing for another reason. Removing one doesn't automatically remove the other.

About Kannon Christiansen

Kannon Christiansen is a Realtor with Keller Williams Realty Chico Area, serving buyers and sellers throughout Chico, CA and Butte County.

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