How Buyers Are Using Appraisal Gap Contingencies to Win

By Mark Callender

Hello, my name is Mark Callender and I am a licensed real estate agent with RE/MAX Results. Because I have been helping families buy and sell their homes for more than 18 years, I am now helping their children to buy their first homes and their parents to downsize. No matter the direction you’re moving, my goal is to make the process as calm and enjoyable as it can be.

Appraisal gap contingencies have been coming up a lot in our market. Buyers are making high offers on properties, and the market is so fierce that homes are selling well over list price. If a home is listed at $250,000, some buyers are tempted to make offers of $275,000 with an appraisal gap contingency to sweeten the deal.

An appraisal gap contingency says that a buyer is willing to come in with cash at closing to make up the difference between the appraisal price of the home and the price that was initially offered by the buyer. 

The contingency doesn’t have to cover the full gap. You can insert a contingency clause that puts a cap on the limit you’ll offer over the appraised value. This is just one of many factors that sellers consider when deciding which offer to accept.

Four or five months ago, buyers were making offers over list prices because they knew the price would come down when the appraisal came in. Now, appraisal gap contingencies are giving sellers a bridge to sell for more money.

If you have any questions about appraisal gap contingencies or anything else related to real estate, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.