When Your San Antonio Deal Doesn't Appraise: Closing the Gap Without Killing the Sale

An appraisal gap is the difference between the contract price and the lender's appraised value. On a $385,000 San Antonio contract that appraises at $370,000, the gap is $15,000 — and the lender will only finance against the $370,000 number. Someone has to solve that $15,000, or the deal terminates. The question is who, and under what contract language.

This is a sellers-and-owners piece, but the mechanics matter to both sides. If you're listing in Bexar County right now — especially outside the core North Central corridor — plan for appraisal risk on day one, not on day 22 when the report comes back.

Why gaps are showing up again in San Antonio

During 2021–2022, appraisal gaps were a daily event because contract prices outran comparable sales. The market has cooled since, but gaps are still common in three specific situations:

• New-construction resales in far-north ZIP codes (78260, 78261, 78255 around Stone Oak, Timberwood Park, and the 1604/281 fringe) where builder incentives on nearby spec homes drag comps down.
• Unique properties with thin comp sets — King William / Lavaca (78204) historic homes, acreage in Helotes or north of Boerne, custom builds in Terrell Hills or Alamo Heights (78209) where the next closest comp is architecturally different.
• Multiple-offer situations where the winning buyer stretched on price, typically inside Alamo Heights ISD or NEISD's higher-demand feeders.

If your listing falls into one of those buckets, the listing agent should be pre-loading the appraiser with comps, not reacting after the fact.

What the TREC contract actually says about appraisals

The standard resale contract — TREC 20-17, One to Four Family Residential Contract (Resale) — does not by itself give the buyer a right to terminate over a low appraisal. Appraisal rights live in addenda.

Third Party Financing Addendum (TREC 40-X)

This addendum, attached when the buyer is financing, gives the buyer the right to terminate if they cannot obtain buyer approval (creditworthiness) within a specified number of days. Property approval — which historically included appraisal — is now handled differently. Under current TREC language, if the lender determines the property does not satisfy underwriting requirements (including appraisal) at any point before closing, the buyer can terminate and recover earnest money. That right runs through closing, not just a short option period.

Addendum Concerning Right to Terminate Due to Lender's Appraisal (TREC 49-X)

This is the form most listing agents in Bexar County are now asking buyers to attach — or waive — in competitive offers. It lets the parties pick one of three structures:

• Waiver — buyer waives appraisal-based termination entirely (the full "appraisal gap waiver").
• Partial waiver — buyer waives termination up to a stated dollar amount below contract price. Example: buyer covers the first $10,000 gap; beyond that, they can terminate.
• Standard right — buyer retains the right to terminate if the appraisal comes in below a specified value within a specified number of days.

If you're a seller weighing two offers, the appraisal addendum language is often worth more than a few thousand dollars of headline price. A $390,000 offer with a $15,000 partial gap waiver is stronger than a $395,000 offer with a full appraisal contingency, particularly if your comps are soft.

The five ways a low appraisal resolves

When the report comes in low, the listing agent, buyer's agent, and both principals have five realistic paths:

1. Buyer brings the gap in cash. Requires liquidity and — if partial waiver language is in place — contractual obligation. Loan-to-value is recalculated against the appraised value, which can affect PMI.
2. Seller reduces to appraised value. Cleanest, fastest. Common when the seller has strong equity and the next-best offer is lower than the appraised number anyway.
3. Split the difference. Seller drops $7,500, buyer brings $7,500. Documented via TREC Amendment (Form 39-9).
4. Challenge the appraisal (Reconsideration of Value). The buyer's loan officer submits a ROV with 3–6 better comps. This works maybe 10–20% of the time and usually moves value by a modest amount, not a large one. Worth trying when you have clearly superior comps the appraiser missed, worth skipping when you don't.
5. Buyer switches loan products or lenders. A new appraisal from a different lender (different appraiser pool) occasionally produces a different number. Costs time — usually 2–3 weeks — and the original lender's appraisal may follow the property for 120 days on conventional loans if the same AMC is used.

If none of those five work, the deal terminates under the financing or appraisal addendum and earnest money returns to the buyer.

What most sellers get wrong

"The appraiser works for me"

The appraiser is hired by the lender's appraisal management company and owes a duty to the lender, not the seller or buyer. You cannot call and argue. You can provide comps to the buyer's loan officer, who forwards them through channels.

Treating the appraisal like a second inspection

Appraisers note condition, but they are not inspectors. Deferred maintenance affects value only when it's severe enough to trigger lender repair requirements — typically FHA and VA, not conventional. On a conventional loan, a dated kitchen does not tank an appraisal; missing comps do.

Ignoring the comp set the appraiser is likely to use

Appraisers pull from MLS (SABOR) and public record (BCAD). They default to closed sales within the last 90 days, within roughly one mile, and similar in size and age. In irregular submarkets — Terrell Hills abutting 78209, or Converse homes in Judson ISD that border NEISD zoning — the comp radius matters enormously. A listing agent who hands the appraiser a comp package with three defensible sales inside the right school boundary frequently moves the number.

Assuming BCAD value has anything to do with it

Bexar Appraisal District's tax value and a market appraisal are different animals. BCAD mass-appraises for ad valorem purposes, caps homestead increases at 10% annually under Texas Property Code § 23.23, and is often meaningfully below or above market. An appraiser will not anchor to BCAD. Do not argue the gap using your tax notice.

Waiting until the report comes in to think about it

By the time the appraisal arrives — typically day 14–21 of a 30-day close — you have maybe 72 hours to renegotiate before contractual deadlines start compressing. The listing agent should have a gap plan in the file before the option period ends.

How to price so the gap never happens

The best gap strategy is pricing the listing where it will appraise. That means:

• Run your CMA on closed sales in the last 90 days, not active listings. Actives tell you about competition; closeds tell you about appraisal.
• Weight sales within the same ISD attendance zone heavily. A house one street over but in a different elementary zone is not the comp you think it is in places like NEISD/NISD boundary areas on the far west side or SAISD/Alamo Heights ISD borders in 78209.
• Adjust for square footage, lot size, garage count, and pool — not for finishes the appraiser can't quantify.
• If your list price is more than 3–5% above your strongest three comps, you are pricing into gap territory on purpose. That's a valid strategy in a strong micro-market, but it needs an appraisal addendum plan attached.

When to involve a professional

If the gap is large, the contract language is ambiguous, or the buyer is threatening to walk with earnest money in play, talk to a Texas real estate attorney before sending an amendment. TREC forms are drafted carefully, and the wrong check-box on Form 39-9 can waive rights you wanted to keep.

If you're preparing to list and want to avoid the gap problem altogether, start with accurate comps and a pricing strategy that matches your micro-market. Browse comparable active listings on RentInSA at /for-sale, list your home FSBO at /list-your-home, or connect with a local agent at /agents who handles Bexar County appraisal negotiations as a routine part of the job.