The Quick Read: The choice turns on which number missed and whether the deal still works at the lender’s number. A reconsideration of value fits a miss you can prove with evidence, such as bad comps or wrong square footage. Walking fits a miss that is real and leaves the deal no longer worth closing.
- A below-list contract does not protect you. The lender compares the appraisal to your contract price, not the seller’s ask.
- Loan sizing generally uses the lower of contract price or appraised value.
- The appraisal sets two numbers: value, which drives leverage, and market rent, which drives coverage.
- A reconsideration wins on evidence, not on opinion.
- Your exit rights come from the purchase contract, so read the contingency before you do anything else.
A rental purchase under contract below list can still come back low. That is the moment most investors ask whether to fight the number or leave. Both are legitimate moves, and neither is the “smart” one in the abstract. This piece referees them for a DSCR purchase. For the wider program picture, Lendmire’s complete DSCR loans guide covers how these loans are structured.
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The Honest Answer: Who Each Option Is Really For
Reconsideration is for the investor whose deal still works and whose appraisal looks wrong on the facts. Walking is for the investor whose deal only worked at the contract price, or whose contingency protection is about to expire anyway.
Here is the plain version. If the appraiser missed square footage, ignored a renovation, or used comps that don’t match the property, an evidence-based request is worth the effort. If the comps are sound and the number is simply lower than you hoped, a request rarely changes it. At that point the choice is cash, renegotiation, or exit.
There is a third group. Some investors should do neither, and instead renegotiate with the seller and close at the appraised value. This article treats that as a branch of the walk decision, because it is usually how a walk threat gets used.
Side-by-Side
| Factor | Reconsideration of Value | Walking Away |
|---|---|---|
| What it is | Request to review the report | Exit under the contract |
| Review basis | Same file, re-examined | File ends |
| Documentation | Comps, corrections, rent evidence | Contract notice, contingency language |
| Property types | Depends on program policy | Any, if contract allows |
| Entity vesting | Buyer entity stays the borrower | Entity is the contract party |
| Timeline | Can run into contingency deadlines | Depends on notice deadlines |
| Reserve expectations | Unchanged; may rise if cash to close grows | Not applicable |
| Main risk | Value stands, time is lost | Deposit forfeited if notice is missed |
The reconsideration column reflects published industry norms. The federal banking agencies define a reconsideration of value as a request from the lender to the appraiser to reassess the report based on potential deficiencies or other information that may affect the value conclusion, per the interagency guidance published in the Federal Register. That same guidance states it does not carry the force of law.
How a Below-List Contract Meets the Appraisal
The list price is the seller’s ask. It is not the collateral value. The lender looks at your contract price and the appraised value, and the loan is generally sized on the lower of the two.
Three outcomes follow:
- Appraisal below contract. The gap is real. Leverage applies to the lower appraised value, so cash to close rises.
- Appraisal at contract. Nothing changes. The deal sizes as planned.
- Appraisal above contract. The loan generally does not grow. You bought well, but the lender still sizes on the lower number.
Most files across our wholesale network land at 75%–80% LTV on a purchase, which is 20%–25% down, subject to lender guidelines. Select high-leverage programs reach 85% LTV on a purchase with roughly a 700+ score. Whichever tier applies, it is applied to the lower number. That is why the “I got a discount” instinct fails here: your discount does not borrow against a higher appraisal.
Diagnose First: Which Number Missed?
The appraisal does two jobs. It sets value for leverage, and it sets market rent for coverage. A miss on one is a different problem from a miss on the other.
| What missed | What changes | What evidence helps |
|---|---|---|
| Value | Loan shrinks, cash to close rises | Better-matched comps, corrected facts |
| Rent | Coverage ratio drops | Rental comps, lease evidence |
| Both | Loan smaller and coverage thinner | Both sets of evidence |
The rent opinion typically comes from a rent schedule. Fannie Mae’s published forms list names Form 1007 as the single-family comparable rent schedule and Form 1025 as the small residential income property report used for 2–4 units. DSCR loans are not agency products, and we cite those forms only to show that value and rent are separate opinions in the same report.
A strong in-place lease does not always rescue a low rent opinion. Many programs use the lower of lease rent or market rent. So a rent miss can hurt coverage even when your tenant pays more than the appraiser thinks the unit would rent for.
Here is the check that matters. DSCR compares rent to PITIA only. Clearing 1.00 is not the same as positive cash flow, because repairs, vacancy, management, utilities, and capex sit outside the calculation. A deal that clears coverage after a rent miss can still be a poor deal.
When Reconsideration Is the Better Fit
Reconsideration is the better fit when the miss is provable, the gap is meaningful to your return, and your contingency window still has room.
The grounds are specific. Practitioners describe the same short list: corrected square footage, missed upgrades, and better or more recent comps.
A few rules shape how it works:
- It goes through the lender or broker. You do not contact the appraiser directly.
- It needs evidence. Appraisers must stay independent, and a request cannot demand a number. A request that rests only on hope rarely wins.
- Outcomes vary. The appraiser may correct the report, partly revise it, or leave it unchanged. Corrections happen more often than full reversals.
- Lender policy governs. The interagency guidance is addressed to regulated institutions. Whether a business-purpose investor loan offers a reconsideration, a second appraisal, or neither is set by the program. Treat it as a request the program may allow, not a right.
Picture a duplex under contract below list where the appraiser counted one unit as smaller than it is and used two comps from a different part of town. Corrected measurements plus three better-matched sales is a clean packet. Compare that with an investor who simply thinks the property is worth more. The first is a correction request. The second is an opinion dispute.
Reconsideration fits best when:
1. The error is documented, not argued.
2. The gap is large enough to move your return.
3. You have time before contingency deadlines.
4. The program permits a review or second report.
Flip point: if the comps are sound and the appraiser followed them, reconsideration mostly burns time. Time matters because an open request can run into your contingency deadline.
When Walking Away Is the Better Fit
Walking is the better fit when the deal only worked at the contract price, the gap is more than you will cover, or the appraisal is reasonable and you would be buying underwater.
Your right to exit comes from the purchase contract, not from any regulator. Check three things first: whether an appraisal or financing contingency exists, what its wording says, and when its deadlines and notice requirements fall. Consumer and brokerage sources warn that a missed deadline or improper notice can cost the earnest money. If the buyer is an LLC, the LLC is the party to that contract, so the notice should come from the entity.
Walking is also a negotiating move. The most commonly described first step is to renegotiate toward the appraised value, and another financed buyer would likely face the same appraisal, which weakens the seller’s position. That leverage is smaller when you already bought below list. The seller has conceded once, so there may be less room left.
One experienced investor in a BiggerPockets thread argued against closing a deal that is underwater from day one when the appraisal is reasonable. That is a single opinion, but the economics behind it are sound. A low appraisal is not a verdict on whether the deal is good. It is a financing mechanics issue. The real question is whether the lender’s number supports the price you contracted, and whether rent holds at the lower loan.
Walking fits best when:
1. The comps support the appraiser’s number.
2. Covering the gap would cut your return below what the deal needs.
3. Your contingency is intact and the deadline is workable.
4. The seller will not move on price.
Flip point: if your contingency has expired, walking stops being free. Then the real comparison is the cost of closing against the cost of forfeiting the deposit.
The Practical Spectrum: Five Moves, Not Two
Investors rarely face a pure either-or. Most situations sort into five moves, and walking is the last one.
| Move | Best when | Cash impact | Deal risk |
|---|---|---|---|
| Reconsider | Error is provable | None if it works | Time lost if it fails |
| Renegotiate | Seller has room | Lower price, less cash | Seller refuses |
| Bring cash | Deal still pencils | Higher cash to close | Thinner return |
| Restructure | Coverage is the problem | Varies | Terms adjust |
| Walk | Deal no longer works | Possible deposit loss | Lost opportunity |
Restructuring deserves a note. A larger down payment lowers the monthly obligation and can lift coverage. It never erases leverage caps, credit floors, reserve rules, or property eligibility. Coverage below 1.00 is available through select lenders in the network, with leverage and terms adjusted. That is a structural option, but it is worth asking whether you should use it. If you are reaching for it because the deal stopped working, that is a signal to reconsider the deal, not the loan type.
DSCR vs. conventional financing
There are two common ways to finance an investment property, and they qualify you differently — here’s how investors weigh them.
Why investors choose it
- Qualifies on the property’s rental income — no personal tax returns, W-2s, or pay stubs needed to document income.
- No personal debt-to-income ceiling to clear, so existing mortgages and obligations don’t cap your borrowing the same way.
- Can be closed in an LLC, keeping the property inside a business entity.
- Built for scaling — not held to the limit on number of financed properties that conventional financing applies.
- Underwriting centers on the deal: generally qualifies when the rent covers the payment, a 1.00x coverage ratio being a common baseline (confirmed in underwriting).
- Designed specifically for investment property, including long-term and, where the program allows, short-term rentals.
Where it’s strong
- Often the lowest ongoing financing cost for a buyer who fully qualifies on personal income — a fit for a first property or a cost-first purchase.
Trade-offs for investors
- Requires full personal income documentation and must fit within a debt-to-income limit — salary, existing debts, and other mortgages all count.
- Typically held in your personal name rather than a business entity.
- Caps how many financed properties you can carry, which can become a ceiling as a portfolio grows.
- Evaluates you as a borrower as much as the property, which usually means more paperwork.
How investors usually choose: a first or single property often optimizes for the lowest financing cost; portfolio builders often optimize for leverage, vesting in an LLC, and scaling past conventional caps. The right answer depends on your goals, the property, and current guidelines — both paths run through select lenders in Lendmire’s wholesale network, with eligibility and terms confirmed in underwriting.
A Decision Rule You Can Actually Use
Run these questions in order.
1. Is the contingency intact, and how many days remain? If not, the walk option is expensive. Skip ahead to cash or restructure.
2. Which number missed? Value, rent, or both.
3. Is the miss provable with documents? If yes, reconsideration is worth the effort. If no, move on.
4. Does the deal still pencil at the lender’s number? Test coverage and your cash-on-cash return at the lower loan, with repairs, vacancy, and management in view.
5. Will the seller move? If yes, renegotiate before anything else.
6. If none of these works, walk. Walking in this case is a decision, not a defeat.
A Worked Example: Three Paths
Run the numbers on a hypothetical fourplex under contract below list. Assume it was underwritten at 75% LTV on a purchase, with rent covering the payment at roughly 1.25x. These are modeled inputs, not market data. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
The appraisal comes back below contract, and the rent opinion also lands light. The loan shrinks because leverage applies to the lower value, and coverage falls toward the low end of the range because the rent opinion is lower.
- Contest. The appraiser’s square footage was wrong and two comps were mismatched. You file a packet through the lender. If the value is corrected, nothing else changes. If it stands, you have spent time against your contingency clock.
- Renegotiate and close. You show the seller the appraisal and propose a price at or near the appraised value. If the seller agrees, the gap closes and coverage improves because the loan is smaller relative to rent.
- Exit. The comps are sound, the seller will not move, and covering the gap would leave you with a thin cushion. You walk under the contingency and recover the deposit.
For the first two paths, test coverage after the change. For the third, count your sunk costs: inspection, appraisal, and the cost of restarting the search. Walking is cheaper than closing a bad deal, but it is not free. A file that clears 1.00 can still be a weak investment, so make the choice on return, not on whether it qualifies.
After a Failed Reconsideration
If the value stands, work through the remaining moves in this order: renegotiate, bring cash if the return still holds, restructure leverage or the product, and then exit. If you are considering a second appraisal or another lender, know that a second report is possible in some programs, not always allowed. Treat it as an exception.
Larger loans add a wrinkle. Some programs require two appraisals above a loan-size threshold, and the lower value typically controls. Lendmire’s piece Traditional Jumbo vs Super Jumbo DSCR for a $3M Rental Property covers how size changes the structure. On blanket or multi-property files, each property’s appraisal is its own risk event, and one weak property can pull down a pooled result.
Key Terms Defined
- Reconsideration of value (ROV): A request, made through the lender, asking the appraiser to review a report based on errors or new information.
- Lower-of rule: Loan sizing generally uses the lower of contract price or appraised value.
- Appraisal gap: The shortfall between the contract price and a lower appraised value.
- DSCR coverage: rent used for lender review divided by PITIA; it measures whether rent covers the full housing payment.
- Contingency: A contract clause that lets the buyer renegotiate or exit if conditions, such as appraisal value, are not met.
The Balanced Verdict
Reconsideration and walking solve different problems. Reconsideration fixes a factual error. Walking protects you from a deal that stopped working. The investor with a documented miss, time on the clock, and a deal that still pencils should reconsider. The investor with sound comps, a thin margin, and a live contingency should renegotiate or walk. If you cannot say which category you are in, the diagnostic step above is where to start.
Frequently Asked Questions
Can I contest the value by contacting the appraiser directly?
No. The request goes through the lender or broker. Appraisers must stay independent, and the process is built around evidence, not pressure on a number.
Does a second appraisal reset the outcome?
Sometimes, but not always. Some programs allow a second report or an independent review, and others do not. Even when allowed, the lower value often controls, so a second appraisal is an exception to plan around, not a default.
Will I lose my deposit if I walk?
It depends on your contract. If the appraisal or financing contingency is intact and you give notice on time, walking is generally protected. If deadlines pass or notice is improper, the deposit may be at risk. Read the clause before acting.
What if the appraisal comes in above my contract price?
The loan generally does not increase. Sizing uses the lower number, which is your contract price. You bought well, but the lender will not lend against the higher figure.
Does buying below list help me at appraisal?
Not directly. The lender compares the appraisal to your contract price, so a below-list deal can still come in low. The discount helps your equity position, not the lender’s valuation.
What if rent missed rather than value?
Then the problem is coverage. A reconsideration can address it with rental comps, but a strong lease alone may not override a low market-rent opinion. If you are weighing the structure of a larger file, Lendmire’s piece Two Individual Cash-Out Refinances vs a Two-Property Blanket Loan shows how pooled files behave.
If you are buying or refinancing a rental property and want to see how the numbers work, Lendmire can help you compare DSCR loan options based on the property income, credit profile, leverage, and investor goals. Program availability and terms vary by lender and file, and tax treatment varies; consult a qualified professional.
A low appraisal is one number, and the investors who handle it well keep asking whether the deal still earns its place in their portfolio.
About Lendmire
Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed around property-level rental income rather than personal income, subject to lender and program guidelines, a fit for self-employed investors and LLC-owned portfolios. Lendmire was recognized as a Scotsman Guide Top Mortgage Workplace in 2025 and 2026.
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References
1. Federal Register – Interagency Guidance on Reconsiderations of Value
2. Fannie Mae Selling & Servicing Guide Forms
3. Rexmont – What to do with a low appraisal
4. RealCostIQ – Appraisal gap guide
5. BiggerPockets – Appraisal came in too low
6. FastExpert – Appraisal came in low
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Rent a DSCR-Financed Property to a Family Member? · Can a Higher Insurance Renewal Push a Rental Below the DSCR Floor? · How to Shop and Document Rental Insurance Before a DSCR Loan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.