Example
- Purchase price: $600,000
- Appraisal: $575,000
- Appraisal gap: $25,000
Does Buyer Automatically Owe $25,000 Cash?
Not necessarily.
What happens depends on the contract, appraisal contingency, financing, buyer cash, seller negotiation and other terms.
Possible Outcomes
- Seller reduces price: $600,000 to $575,000.
- Buyer covers gap: buyer brings additional permitted funds.
- Split difference: seller reduces part; buyer covers part.
- Challenge appraisal: relevant factual errors or stronger comparable data may potentially support reconsideration.
- Transaction ends: depending on contract rights.
Appraisal Gap Clause
In competitive markets, buyers sometimes agree in advance to cover some appraisal shortage.
Example: buyer agrees to pay up to $10,000 above appraised value.
That is real financial exposure.
How Lisa Helps
Lisa can evaluate comparable sales before the offer and explain the real-estate risk of aggressive appraisal-gap terms.
