Appraisal gap
When the appraised value comes in below the contract price. The buyer, seller, and lender have to decide who covers the difference or whether the deal renegotiates.
Your Room opens on this part of the sale, with the offer and everything before it already ticked.
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See how it worksWhere this comes up in a sale, and what follows
- Clear title (comes before)
Part 1 of 4
Why a seller cares
The gap is the dollar figure between the price and the appraisal, and somebody has to cover it or the price has to move. Offers that promise to cover a gap are telling you the buyer has cash beyond the down payment.
Part 2 of 4
A simple example
Price $310,000, appraisal $298,000: a $12,000 gap. The offer included a clause covering up to $10,000 of any gap.
| What the offer said | How the $12,000 gets settled |
|---|---|
| Gap coverage up to $10,000 | The buyer pays $10,000; the last $2,000 is negotiated |
| No gap clause, appraisal contingency intact | The buyer can ask for $298,000 or leave |
| Appraisal contingency waived | The buyer owes the whole gap or forfeits their deposit |
A gap clause is a promise about cash. The size of the promise is the size of the cushion under your price.
Part 3 of 4
What people get wrong
That a gap means the home was overpriced. It means one appraiser's comps came out lower than one buyer's offer, and both can be reasonable.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
In your Room, this word explains itself where it appears.
Your Room defines appraisal gap in the step you meet it in, beside the document or the date it belongs to. Free to set up, with an agent or on your own.
Organize my saleFree to set up. Pay once when you list: $89 or $189. 7-day refund.