By David Parks · eXp Realty · The Apollo Group · 2 min read
An appraisal gap happens when a home appraises for less than the agreed price. The lender will only loan based on the appraised value, so someone has to cover the difference or renegotiate.
An appraiser compares the home to recent similar sales. In a fast market, price can run ahead of recent sales, causing a shortfall.
Talk with your lender about how much cash you could add if needed. In competitive offers, some buyers include an appraisal gap clause, which is a promise to cover a set amount. This increases risk, so only commit to what you can afford.
Ask your agent for recent sales comparable to the home, so you know how price compares before you offer. Appraisals are one opinion, and may differ from the market.
This article is general information, not legal, tax, financial or inspection advice. Every home and situation is different, so confirm details with a licensed inspector, lender, attorney or tax professional.
David is a Greater Denver real estate advisor with eXp Realty and The Apollo Group (Colorado broker license FA100103211). He has closed more than $55 million in volume, earned eXp Icon status in 2025, and holds a 5.0 rating on Zillow from 27 verified reviews.
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