The appraisal came in under · Texas
A low appraisal doesn’t decide anything. Your lender does
Almost everything written about this tells you a number under the price opens the door out. It does not. The contract hands that decision to somebody else entirely, and a one-page form you may be asked to sign can take the door away before the appraiser has even been out.
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One number, two very different mornings
The appraisal is evidence. It is not the decision.
TREC No. 40-11 ¶ 2B does not mention a price gap, a percentage, or a shortfall. What opens the exit is your lender deciding the property does not satisfy its underwriting requirements — and the form is explicit that the appraisal is only one of the things that can cause it, alongside insurability and lender required repairs.
What actually happens
The appraisal lands under the contract price — and your lender looks at it.
If the lender approves it anyway
Nothing opens.
A lender sizes the loan against the lower of the price or the appraised value, so most of the time a low number does move it. What decides this branch is whether you have enough cash that the lender’s math still works without the loan changing. If you do, the property satisfied underwriting, there is no termination right here to use, and you are buying the house at the price you agreed.
If the lender says the property does not satisfy it
Then, and only then, you can terminate.
The right is real and it refunds your earnest money. It is also not automatic and nobody triggers it for you: it takes a notice of termination and the lender's written statement of the reasons, and it has a date on it.
TREC No. 40-11 ¶ 2B
Which branch you are on is a question for your lender on the day, and the answer changes what every conversation after it is about. Worth asking out loud before anybody starts negotiating.
The one-page form that outranks the appraisal
Three boxes. Two of them cost you the exit.
TREC No. 49-1 is one page with three checkboxes and the instruction “Check one box only”. In a competitive offer, checking one of them is routinely presented as a way to make your offer stronger. It is — and here is what each one actually does.
| The box | What it does to your TREC No. 40-11 ¶ 2B right | What you fill in |
|---|---|---|
| Gives up a right (1) Waiver | You give up the right to terminate under ¶ 2B if property approval fails because of the appraised value. There is no figure and no limit — it applies however far under the price the appraisal lands. | What you fill in Nothing to fill in. |
| Gives up a right (2) Partial Waiver | You give up the same ¶ 2B right, but only where the opinion of value comes in at or above a dollar figure you name. Below that figure the right survives. It is a floor under the waiver, not a ceiling on your cash. | What you fill in One blank: a dollar amount. |
| Adds a right (3) Additional Right to Terminate | The only box that gives you something. On top of ¶ 2B, you may terminate if the appraised value lands under a figure you name — and you have to deliver a copy of the appraisal to the seller to do it. Terminate this way and the earnest money is refunded. Read the days carefully: they run from the Effective Date, not from the day the appraisal arrives. | What you fill in Two blanks: a number of days, and a dollar amount. |
The part of box (3) to read twice
The blank you fill in reads within ___ days after the Effective Date. That clock starts the day the contract was formed, not the day the appraisal lands. An appraisal is ordered after the contract and can take a couple of weeks to come back. Write a short number in that blank and the extra right you negotiated for can expire before the appraiser has filed anything, which is the quietest way there is to pay for protection and not have it.
Two things about that table you will read the opposite of elsewhere
The first: the dollar figure in box (2) is a floor under the waiver, not a ceiling on your money. Texas REALTORS® says it in terms — partial waiver “does not set an upper limit on the amount buyers will have to pay over the appraisal amount.” Pages describing it as a cap on the cash you would bring to closing have it backwards, and a buyer who believes that is choosing a box on a false picture of what it costs.
The second: boxes (1) and (2) each carry a quiet second sentence. If the lender reduces the loan because of the value it was given, the cash portion of the sales price increases by whatever the lender takes off the loan. Nothing is renegotiated and nobody asks you. The gap simply becomes cash, on the same closing date.
A caution in our own direction
TREC No. 49-1 is not the only route to that waiver. TREC No. 40-11 ¶ 1G carries its own “does / does not waive all rights to terminate under ¶ 2B” checkbox. Narrower, but real — so the question to ask is not only “is 49-1 attached”.
Nothing arrives to tell you
The protection closes by itself.
People wait for an approval. There isn’t one. TREC No. 40-11 ¶ 2B ends by saying that if you do not terminate under it, property approval is deemed to have been obtained. So the exit does not get taken away from you by anybody, and it does not stay open while a negotiation drags on. It expires on its own once the day passes — the 3rd day before the closing date is the last day you can use it — and no notice goes out when it does.
That is why the week a number comes in low is a calendar problem before it is a money problem. The negotiating — and there usually is some — happens inside a window that is quietly running down the whole time, and the day it shuts is the day your position changes from “we are discussing this” to “we are buying this house.”
Asked in the week it happens
Four questions the number raises.
Is the partial waiver a cap on how much cash I might have to bring?
No, and this is the one worth reading twice. The dollar figure in box (2) is a floor under the waiver, not a ceiling on your money. Texas REALTORS® puts it plainly: choosing partial waiver “does not set an upper limit on the amount buyers will have to pay over the appraisal amount. It simply governs the appraisal amount upon which the buyer gives up the right to terminate.” Above that figure you have given up the exit and the cash portion of the sales price increases by whatever the lender takes off the loan. Below it, the ¶ 2B right survives.
My down payment is large. Does that change what happens?
It can, and not in the direction people expect. The exit in TREC No. 40-11 ¶ 2B opens on your lender deciding the property does not satisfy its underwriting requirements — not on the appraised number. If you are putting enough down that the lender is still comfortable with the loan at the lower value, the lender may approve the property anyway, and then there is nothing in that paragraph to terminate under. A bigger down payment buys you a stronger offer and can quietly cost you the exit that came with it.
I am using an FHA or VA loan. Does any of this apply to me?
Not the addendum — it says so on its own face. TREC No. 49-1 is to be used only where the Third Party Financing Addendum is attached and the loan is not FHA or VA, so the addendum is not yours. The rest of this page still is: TREC No. 40-11 ¶ 2B applies to you exactly as written, including the deadline that closes by itself, and TREC No. 40-11 ¶ 4 adds an appraised-value protection on top of it, disapplying the three-day notice requirement for that paragraph only. So ask your agent to walk you through TREC No. 40-11 ¶ 4 rather than assuming what you have read about 49-1 covers you.
If nobody sends me anything, is my appraisal protection still sitting there?
No. That is the part of TREC No. 40-11 ¶ 2B that catches people, and it is the paragraph's own last sentence: if you do not terminate under it, property approval is deemed to have been obtained. There is no approval to wait for and nothing arrives to tell you the window shut. It closes by operation of the form once that day passes — the 3rd day before the closing date is the last day you can use it — whether anybody was watching or not.
Ask us about your own contract
Sources for the contract detail on this page, verified September 2026: TREC One to Four Family Residential Contract (Resale), No. 20-19 · TREC Third Party Financing Addendum, No. 40-11 · TREC Addendum Concerning Right to Terminate Due to Lender’s Appraisal, No. 49-1 · Texas Occupations Code Chapter 1101 · Texas Property Code § 5.008. Paragraph numbers move between form revisions, so each one above is cited with its form — much of what is written about this cites TREC 40-7 or 40-9, and both are retired. The revisions read here are TREC No. 40-11, revised 11-04-2024, effective 01/03/2025, and TREC No. 49-1, revised 11-15-2018, effective 03/01/2019. Everything here describes how the forms work; what they mean for your contract is a question for an attorney.
Most of these still close
A bad number is a week, not an ending.
Sellers move, lenders reconsider, values get challenged, and buyers decide the house is worth the difference. What decides how that week goes is knowing which of your rights is real, which one somebody asked you to sign away, and exactly when it stops mattering.
Or call or text (817) 631-9803