An appraisal gap is the difference between the price a buyer agreed to pay and a lower value an appraiser assigns the house. A lender will only loan against the appraised value, so the buyer has to cover the gap in cash, renegotiate the price, or the deal falls apart. A seller who takes a financed offer above recent comparable sales is taking on this risk.
Why it matters
An appraisal gap is the reason a signed contract at a strong price can still fail to close.