You won the bid by waiving your financing condition, and then the appraisal came in below your purchase price. Your offer is firm, so you cannot walk away over financing. You need to cover the gap to close, and you need to do it quickly.
This is a moment many Canadian buyers panic over in a hot market. Pekoe is a licensed brokerage serving all of Ontario (FSRA Licence #13321) and Alberta (RECA licensed), and we help buyers work through this exact trap. Here are your real options, and how to avoid it next time.
Why Does a Low Appraisal Matter?
Lenders do not fund based on your purchase price. They fund a percentage of the appraised value, and they use the lower of price or appraisal.
Say you agreed to pay $600,000 but the appraisal comes in at $550,000. The lender bases your mortgage on the $550,000, and the difference becomes your problem to solve. That shortfall is real money you did not budget for, and it lands in the final days before closing.
What Happens Because You Already Waived Your Financing Condition?
A waived financing condition means your offer is firm. You removed the safety net that would have let you walk away if the lender did not approve the mortgage.
Because the offer is firm, you cannot tell the lender you will wait for a better appraisal or shop for one that ignores the gap. You must close with the money on hand, or you breach the contract and risk your deposit and legal action.
This is why understanding the financing condition and the risks of waiving your financing condition matters before you make the bid.
How to Cover the Shortfall: Your Real Options
The table lays out the main ways to close the gap, with the trade-off on each.
| Option | What It Does | Trade-off |
|---|---|---|
| Add cash to your down payment | Covers the gap from savings or a line of credit | Ties up more of your own money |
| Renegotiate the purchase price | Ask the seller to lower the price to the appraisal | Seller may refuse, deal falls apart |
| Request a second appraisal | Challenge the value with a review or second opinion | Extra cost, no guarantee of a higher value |
| Add a co-signer | Strengthens the file and may open up options | Ties another person’s credit to your deal |
| Work with a B-lender | May fund closer to your purchase price | Higher rate and fees over the term |
Adding cash is the most common route. If you can reach extra funds through savings, family, or a line of credit, you bring more money to closing. It is not ideal, but it is straightforward.
Renegotiating needs the seller to agree. In a soft market or with a motivated seller, they may drop to the appraisal, but a seller who knows you are trapped will likely refuse.
A second appraisal is a gamble, because appraisers rely on the same comparable sales. A reversal is possible but not common, and you pay for the second appraisal with no guarantee.
A co-signer can open up lenders you could not reach alone, at the cost of tying another person’s finances to your deal. A B-lender is a last resort that may fund closer to your price, but usually at a higher rate and with fees that add up over the mortgage term.
Can You Dispute or Reorder the Appraisal?
Yes, sometimes. If the appraisal is genuinely wrong, for example the appraiser missed a renovation or used the wrong comparables, your broker can request a review, or your lender can order a second appraisal.
The catch is timing and cost. A review takes several business days and a second appraisal can take a few weeks, so if your closing is days away, this option is off the table.
A successful challenge needs solid evidence. A missed bedroom or a square-footage error is clear evidence, while arguing that the market “feels” worth more is not, because the appraiser values comparable sales, not sentiment.
A broker can guide the process and argue your case, but the decision rests with the appraiser and the lender.
How to Avoid This Next Time
Do not waive your financing condition just to win a bid. Understand the appraisal risk before you remove it.
Get as close to a full approval as possible before waiving. A full approval, not just a pre-approval, means the lender has ordered the appraisal and verified your income, credit, and employment.
Know the market. If comparable sales in the neighbourhood sit well below your offer, the appraisal will reflect that, and your broker can pull comps and give you an honest read before you bid.
Have a shortfall plan ready. Talk to your broker about whether you can reach extra cash or add a co-signer, so you are not bidding blind. Where you can, negotiate on price and keep a financing condition instead of waiving it.
Frequently Asked Questions
What happens if the appraisal is lower than my offer price?
Your lender funds on the lower appraisal value, not your purchase price. You must cover the difference at closing to proceed. If you cannot, you cannot close, and you breach the contract.
Can I get out of the deal if I already waived financing and the appraisal is low?
Not without consequences. A waived financing condition removes your exit, so you must close or face breach of contract. Your only remaining outs are unwaived conditions such as inspection or a title issue.
Who actually pays the difference on a low appraisal?
You do. The seller has no obligation to make up the gap once they accepted your offer. The difference is your responsibility, paid in cash at closing.
Can I challenge a low appraisal?
Possibly. A broker can request an appraisal review or point out clear errors to your lender, but it takes time and costs money. Success is not guaranteed.
How do I avoid this next time I buy?
Understand your appraisal risk before waiving financing, get close to a full approval, ask your broker for a comparable sales read, plan for a shortfall, and keep a financing condition where you can.
Let a Broker Move Fast
If you are already in this spot, do not panic and do not assume the deal is dead. A broker with strong lender relationships can move quickly to explore options, request a review, or find a co-signer path.
Have a question? Chat with our team or AI assistant directly on pekoe.ca.
Call or chat with Pekoe.ca to explore your options before your closing deadline arrives.
