The appraisal can have a significant impact on the amount of the down payment you will have to pay. In a seller’s market, when buyers are many and sellers are few, property may be overpriced. You are free, of course, to pay any amount you wish for the property you buy. The problem arises with the loan you can get. For example, if the property you want to buy is appraised at $5,000 less than the price you have agreed to pay, your lender will want you to come up with a down payment that is $5,000 more than would be required if the property had appraised at the sale price.
Traditionally, a conventional (not government-insured or guaranteed) loan required a minimum 20% down payment. Government-insured or guaranteed loans required between 0% and 10% down, depending on the type of loan. Unfortunately, because of the changing standards involving real estate, fewer people have the 20% required down payment. However, there are ways to pay a smaller down payment.