Don’t Let an Appraisal Gap Derail Your Brooklyn Dream Home

Don’t Let an Appraisal Gap Derail Your Brooklyn Dream Home

Buying Smart in Brooklyn Means Understanding the Appraisal Gap

The Brooklyn real estate market is fierce. With bidding wars still common across neighborhoods like Park Slope, Bay Ridge, and Crown Heights, buyers often find themselves offering well above asking price just to stay competitive. But what happens when the bank disagrees with your bid?

That’s where an appraisal gap comes in — and if you're not careful, it can cost you thousands.

Let’s break it down.

What Is an Appraisal Gap?

An appraisal gap happens when the agreed-upon purchase price for a property is higher than what the bank’s appraiser determines the home is worth. Since lenders base their loan on the appraised value—not the offer price—you’re left responsible for covering the difference in cash.

Consider this real-world example:

Sarah, a Brooklyn buyer, bid $323,000 on a co-op listed at $279,000.
The bank only appraised it at $300,000.
She had to pay the $23,000 appraisal gap out of pocket—on top of her down payment and closing costs.

It’s a painful surprise for buyers who weren’t prepared.

Why This Is Happening More Often in Brooklyn

According to recent reporting in The Wall Street Journal and The Real Deal, Brooklyn buyers are facing a double whammy:

• Skyrocketing demand pushing offers well over list prices

• Lenders staying conservative on appraisals due to market volatility

In neighborhoods like Greenpoint or Prospect Lefferts Gardens, where inventory is tight and listings spark bidding wars, it’s common to see offers 5–10% over ask. But lenders don’t always agree with market emotion—and that’s where buyers must tread carefully.

4 Ways to Handle an Appraisal Gap

At Pen Realty, we empower our buyers with the knowledge and tools to handle (or avoid) appraisal gaps. Here’s how:

1. Pay the Difference in Cash

If you have the funds, you can choose to pay the difference between the appraised value and the contract price.

2. Renegotiate with the Seller

Sellers may agree to lower the price, especially if they fear the deal falling apart.

3. Dispute the Appraisal

Your mortgage broker can challenge the appraisal by submitting comparable sales the appraiser may have missed.

4. Walk Away — If Protected

With the right appraisal contingency in your offer, you can exit the deal without penalty. That’s why it’s critical to have a knowledgeable agent and lender in your corner from day one.

The Pen Realty Advantage: Education Before the Bid

Too many buyers fall in love with a property and race to win — without understanding the full financial implications. At Pen Realty, we take the opposite approach.

We believe in educating our buyers before they bid, ensuring you're fully prepared for scenarios like appraisal gaps, post-inspection negotiations, or shifting rates.

Our buyer clients receive:

• A detailed walkthrough of offer strategy and contingencies

• Access to our Offer Submission Form to structure deals that protect your interests

• Partnership with top-tier mortgage professionals like Andrew Russell of RCG Mortgage to get pre-approved and appraiser-ready

Ready to Buy in Brooklyn? Start Smart.

Whether you're a first-time buyer or trading up in the boroughs, navigating the appraisal process wisely could save you tens of thousands—and your dream home.

Download our free Brooklyn Buyer’s Guide to learn:

• How to build a strong offer

• What to ask your lender

• The do’s and don’ts before closing

📘 Download the Buyer’s Guide

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A Signature Experience with Peter Mancini

I'm Peter Mancini, Licensed Real Estate Broker with Pen Realty, proud member of REBNY and BNYMLS. I specialize in helping Brooklyn buyers make empowered, informed decisions in a fast-moving market.

Let’s protect your purchase—and your future.

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