Buying With a VA Loan? A York County Court Case Offers an Expensive Lesson
By John Womeldorf, Mr. Williamsburg | Liz Moore & Associates
A low appraisal can create a difficult decision when you have found a home you love. Do you walk away, ask the seller to reduce the price, or contribute additional money to make the purchase work?
For buyers using a Department of Veterans Affairs home loan, an important contract protection helps address that situation. But a recent York County case shows why buyers need to understand what happens when they decide to move forward after receiving a low VA appraisal.
The lesson is especially relevant to veterans, active-duty service members and other eligible buyers purchasing in Williamsburg, York County and Hampton Roads: before signing a price-reduction addendum, understand what you are agreeing to—and which options you may be leaving behind.
The Seaford Purchase That Ended in Court
In Kennedy v. Almond, published September 29, 2026, the Court of Appeals of Virginia affirmed a breach-of-contract judgment arising from a Seaford home purchase.
The buyer agreed to pay $845,000 using VA financing. The VA appraisal was $750,000. Knowing that value, he signed an addendum reducing the price to $781,000—still $31,000 above the appraisal.
He later attempted to terminate under the VA escape clause. He argued that the addendum preserved the original contract terms, including his right to withdraw because the price exceeded the appraisal. His principal broker had warned him otherwise.
The court held that signing the renegotiated agreement elected to proceed despite the known appraisal. The unchanged-terms language did not renew the cancellation option.
The financial consequences were substantial. The buyer was ordered to pay the seller $96,000 for the shortfall when the property was eventually sold to someone else, along with $46,860 in lost fees to the listing brokerage and $37,474 in attorney fees. Together, those amounts totaled $180,334, in addition to the loss of his earnest money deposit. His request to recover his own attorney fees was also denied.
The court also noted emails expressing concerns about the property’s condition. That detail offers another lesson for buyers: concerns about repairs or defects need to be addressed through the appropriate contract provisions, rather than by assuming an appraisal clause remains available after agreeing to proceed.
The opinion did not establish a universal deadline for exercising the low-appraisal cancellation option. Its holding addressed the buyer’s decision to sign the addendum after learning the value.
Read the published court opinion.
What the VA Escape Clause Does for Buyers
The VA escape clause protects an eligible buyer when the contract price exceeds the reasonable value established by VA. VA guidance describes three possible responses: negotiate a lower price, proceed while covering the difference with the buyer’s funds, or exit without forfeiting earnest money under the clause.
VA also allows a buyer to request a reconsideration of value. Your lender can explain that process and whether there is information supporting a review.
The clause addresses the appraisal shortfall. VA expressly says it cannot be used to cancel for other reasons. That distinction matters when a buyer’s concerns involve repairs, property condition or a change in plans.
Read VA’s escape-clause guidance.
Before You Agree to Pay Above the Appraisal
My advice to buyers is to pause long enough to understand the full picture before signing anything that resolves an appraisal issue.
Start with the money. If the seller reduces the price but leaves it above the VA value, ask your lender for an updated estimate showing the funds needed to close. Review the appraisal gap alongside closing costs, any applicable down payment, moving expenses and the reserves you want to retain after purchasing.
For example, suppose you agree to purchase a home for $500,000 and the VA value comes in at $480,000. The seller offers to reduce the price to $490,000. That is a meaningful concession, but it still leaves a $10,000 difference. Before accepting, you need to understand how that difference will be funded and whether the revised purchase still makes sense for you.
Then consider the house itself. Are you comfortable with its condition? Have the inspections you intended to obtain been completed? Are repair negotiations resolved? If important questions remain, bring them up before committing to a revised price.
Finally, review the actual addendum with your agent and, when legal rights are uncertain, a Virginia real estate attorney. A signature can carry consequences beyond changing the dollar amount on the first page of the contract.
Keep Inspection Concerns and Appraisal Concerns Separate
One of the most useful habits in a home purchase is identifying the exact problem you are trying to solve.
An appraisal shortfall raises questions about value and funding. An inspection concern raises questions about the property’s condition, repair obligations and the rights provided by your inspection contingency. A financing problem requires a review of your financing provisions and lender’s requirements.
Those issues can overlap, but buyers should not assume that one contingency provides a substitute for another.
If an inspection or engineering report raises concerns, the next step is to review the relevant contract terms and deadlines promptly. Do not assume that a low appraisal provides an additional way out after you have already agreed to proceed despite it.
Likewise, choosing to move forward after a low appraisal does not, by itself, answer every question about other contractual rights. Those depend on the agreement, the facts and any applicable deadlines.
Put the Decision in Writing
Clear documentation helps everyone understand where the transaction stands.
If the buyer chooses to terminate, the notice should follow the contract’s requirements. If the buyer elects to proceed at a revised price, the paperwork should clearly document the known VA value and the buyer’s informed decision.
For a transaction involving an appraisal gap, I would want any language addressing the buyer’s election and remaining termination rights reviewed by the appropriate broker or attorney. Copying a sentence from an article into a contract is no substitute for reviewing the actual agreement.
There is also an important distinction between discussing possible solutions and signing an agreement to proceed. Buyers should ask what a proposed document accomplishes before signing it, rather than assume that every stage of negotiation has the same effect.
What About FHA or Conventional Financing?
This decision interpreted a VA clause in a Virginia transaction. Buyers using FHA or conventional financing should have their own appraisal and financing provisions reviewed. Similar language may raise similar questions, but this opinion should not be presented as a ruling on every type of loan or purchase contract.
Why I’m Sharing This With Local Buyers
I appreciate Newport News attorney Brian D. Lytle of Lytle Law, P.C., for bringing this case to our attention. It is a useful reminder that the details of a purchase agreement matter most when a transaction becomes complicated.
For my buyers, the goal is to make an informed decision while the available options are clear. A lower price may be a good outcome. Paying an appraisal gap may make sense in some circumstances. Walking away may be the right choice in others. What matters is understanding the financial commitment, the condition of the home and the effect of the documents you sign.
If you are planning to buy in Williamsburg, York County or the surrounding Hampton Roads communities with a VA loan, I would be glad to help you evaluate homes, structure an offer and coordinate with your lender. When a contract question needs legal interpretation, we can bring in a Virginia real estate attorney before that question becomes a dispute.
John Womeldorf, REALTOR® — Mr. Williamsburg
Liz Moore & Associates
Call or text: 757-254-8136
Email: John@MrWilliamsburg.com
Website: MrWilliamsburg.com
This article provides general real estate education, not legal advice for a specific transaction. Case reference: Kennedy v. Almond, Record No. 0654-24-1 (Va. Ct. App. Sept. 29, 2026).