Short answer
The buyer normally remains responsible for the agreed purchase price even if the lender supports a lower value. The lender may reduce the mortgage, so the buyer needs more verified cash or another acceptable financing structure. A low appraisal does not automatically reopen the signed price.
The problem the buyer is trying to avoid
The buyer wins a competing offer by paying above recent comparable sales, then discovers that the lender will not finance the emotional premium. The deposit is already paid and the closing deadline keeps moving closer.
A practical Ontario example
Illustration only: A home is purchased firm for $1,050,000 and appraises at $950,000. A lender calculating its loan from the supported value creates a larger down-payment requirement. Rajiv checks for factual appraisal errors, another permitted lender approach, equity from another property and alternative financing, while the lawyer explains the buyer’s contractual exposure.
Questions to ask before signing or waiving
- Which comparables and property issues affected value?
- Will the lender allow a reconsideration or different approved appraiser?
- How much additional cash remains after closing costs?
- Can other-property equity be used safely?
- If short-term money closes the gap, what is the written exit?
Practical routes to compare
- Correct genuine appraisal errors through the lender’s process.
- Compare A and alternative lenders without assuming a second appraisal will be higher.
- Consider a second mortgage, MIC or private bridge only after total cost and exit are tested.
- Get legal advice immediately if closing is at risk.
Separate the offer from the mortgage approval
The Realtor advises on the offer and negotiation; the lawyer interprets legal wording and consequences. Rajiv checks borrower qualification, property acceptability, appraisal exposure, closing cash and lender conditions. A signed offer cannot require a lender to approve the borrower, property or price. An A lender is generally the first route when the complete file fits. Alternative lenders can consider broader income, credit or property situations at higher cost. MIC or private lending can sometimes bridge a short-term problem, but only where cost, equity and a realistic exit make sense.
Verified public guidance
An appraisal is prepared for its client and purpose, and each lender decides whether to accept it and how to calculate eligible value. The Agreement of Purchase and Sale, not the appraisal, fixes the buyer’s contractual price.
Read the primary source. Source checked 2026-09-03. RECO and CAO provide public consumer guidance; the agreement, lawyer’s advice and each lender’s current policy decide the individual file.
Pressure-test the recommendation
Ask what would make the advice fail. A condition may be too short to obtain an appraisal, the approval may still require documents, the property may be unacceptable, the buyer’s funds may be inaccessible, or the clause may not protect the issue the buyer assumes it covers. Confirm the deadline, who must be satisfied, what notice is required and what happens if the condition is not waived. Verbal reassurance should never replace the written clause, the lender’s remaining conditions or the buyer’s own ability to carry the financial risk.
Documents to have before the deadline
- Complete offer, schedules, amendments and notices
- MLS listing, property documents and comparable sales
- Mortgage approval with every outstanding condition
- Deposit and 90-day down-payment history
- Inspection, status certificate, appraisal or specialist reports when applicable
- Written lawyer, lender and Realtor explanations of unresolved risks
Related AskRajiv guidance
Continue with mortgage appraisal lower than purchase price options, low appraisal builder condo financing deadline.
Get a mortgage strategy review before becoming firm
Use Rajiv’s direct mortgage strategy form. Include the offer deadline and the concern you cannot afford to discover after acceptance.
Source and review
Reviewed by Rajiv Verma, Mortgage Broker on 2026-09-03. Educational information only; not legal, real-estate, inspection, appraisal, tax or mortgage approval advice.