What happens when the appraisal or lender value comes in below what you expected

Short answer: lenders don't lend on what you think the property is worth. They lend on the appraisal, and on transitional deals often on what you actually paid plus what you've spent. When those numbers come in lower, the loan shrinks, and that's one of the most common reasons a deal comes back smaller than the ask.

Why it happens

• Cost basis sizing. On a bridge loan, many lenders cap the loan at a percentage of purchase price plus rehab budget, not today's value.
• Comps don't support it. Unique or rural properties have few sales to compare against.
• Wrong valuation method. A hotel valued as land, or a business valued as real estate only, comes in far lower.

A real example

A 56-unit multifamily owner in Georgia asked for $3.4M against a $6M as-is value. The lender sized off cost basis (about $4.6M of purchase plus rehab) and offered $3.0M instead: 50% of as-is value, with a $1.3M rehab holdback. Same property, $400K less, purely because of how it was measured.

What to do

1. Ask us before ordering an appraisal which method the lender will use.
2. Bring your cost documentation: purchase closing statement, invoices, draw history.
3. If the gap is real, add collateral, bring a partner's equity, or go to a lender that sizes on as-is value.

Related: Bridge loans · Cash-out refinance

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