Appraisal Gaps Widening Again — Anyone Else Seeing This?

Question

Had two deals in the last month come in $15-20k under contract price on appraisal, more than I've seen in a while. Buyers had to renegotiate or bring extra cash to close. Wondering if this is a Nashville-specific pocket or if appraisal gaps are creeping back up elsewhere too.

Ryan Thomson · Answer

Seeing it in Colorado Springs too. Not as bad as 2021-2022 but definitely creeping back in the $350k-$500k range.

Homes are going 5-8% over asking in certain pockets and appraisals aren't catching up. Buyers are getting surprised by $15-30k gaps they didn't budget for.

A few things working right now:

Appraisal gap coverage clauses are back to being table stakes on competitive offers. Put a ceiling on what you'll cover so sellers know you're serious but you're not writing a blank check.

Also worth looking at assumable inventory if you haven't. Buyers assuming a 2.75-3.5% loan are often not in 8-offer bidding wars. Less competition means fewer situations where you're chasing an appraisal gap in the first place. You still have to cover the equity gap (purchase price minus remaining loan balance), but the whole dynamic is calmer.

I've closed several assumptions in the last 12 months where buyers weren't in bidding wars at all because the assumable market is less saturated than the conventional market.

The Nashville-specific vs. national question: I'd check what absorption rates are doing in your price band specifically. If under 30 days, you're going to keep seeing gaps. If inventory is softening above $600k, that's a different conversation.

Appraisal Gaps Widening Again — Anyone Else Seeing This?

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