Buyer Education · September 10, 2026 · 8 min read
"Katrina, the house appraised $18,000 low. What happens now?"
My buyer was sitting in her car outside a Bel Air coffee shop, contract in hand, closing scheduled for three weeks out. We'd written a clean offer on a renovated colonial in Harford County. Strong comps. Good bones. She'd been pre-approved, had her down payment ready, loved the neighborhood for the school district.
And the appraiser said no.
Well, not exactly no. The appraiser said the home was worth $282,000. My buyer had offered $300,000. That $18,000 gap? That's where most buyers discover a clause they never really understood when they signed the contract.
Let me back up.
Most Maryland buyers include an appraisal contingency in their offer. It's standard, it's smart, and it's usually one sentence buried in paragraph 12 of the Maryland Association of REALTORS® contract. It says something like: "This contract is contingent upon the property appraising at or above the purchase price."
Sounds simple. If the house doesn't appraise, you walk away and get your earnest money back.
Except that's only half the story.
The other half is a line that reads: "Buyer agrees to pay up to $X over appraised value."
That's the appraisal gap clause. And in the past two years, as housing supply has climbed and buyers have gained leverage, I've watched more and more clients skip right over that number without realizing what they just promised.
Let's use my Tuesday buyer as the example.
So what happens?
The buyer is contractually obligated to bring an extra $10,000 to closing. The remaining $8,000 shortfall? That's now the seller's problem. The seller can either reduce the price by $8,000, or the deal falls apart.
In this case, we renegotiated. The seller came down $6,000, my buyer stretched another $2,000 beyond her gap clause (she really wanted the house), and we closed. But it was tense. And it only worked because both sides had room to move.
When I started seeing appraisal gap clauses show up in every offer, it was late 2023. Homes for sale in Harford County were getting five, six, eight offers. Appraisals lagged behind sale prices by weeks. Buyers were writing $20,000, $30,000 gap clauses just to compete.
Now? Inventory is up. According to the National Association of REALTORS®, we're sitting at a 6-year high in housing supply. Buyers have leverage again. Sellers are pickier about which offer to accept, but they're also more willing to negotiate after an appraisal comes in low.
That means the appraisal gap clause has shifted from a competitive necessity to a liability you might actually have to fund.
Two years ago, most gap clauses never got triggered because appraisals caught up or sellers didn't care. Now, with mortgage rates holding above 6.7% and buyers stretched thin, every dollar counts. And appraisers are taking a harder look at comps.
When we sit down to write an offer, I ask every buyer the same question:
If this house appraises low, how much cash can you actually bring to closing beyond your down payment and closing costs?
Not how much do you want to bring. How much do you have.
That number becomes your appraisal gap clause. If the answer is zero, we write zero. If it's $5,000, we write $5,000. I've had buyers write $25,000 because they had family help standing by and they wanted the house no matter what.
There's no magic number. But there is honesty.
And here's the thing: in Maryland, Pennsylvania, Delaware, and D.C., the appraisal contingency works roughly the same way, but the negotiation culture varies by county. In Baltimore City, sellers expect some back-and-forth. In Howard County, you'll see tighter deals with less room to renegotiate. In Cecil County, where I work with a lot of first-time buyers near the Delaware line, appraisal gaps are less common because sale prices haven't run as hot.
If you're buying in Montgomery County or Anne Arundel, expect appraisers to be conservative. Both counties have seen price corrections in certain neighborhoods, and appraisers remember the comps from six months ago, not last week.
Let's say you're a buyer working with a tight budget. You write an appraisal gap clause of $0. The house appraises $15,000 low.
You now have three options:
Ask the seller to reduce the price by $15,000. They might. They might not. If they have other offers waiting or they're not in a hurry, you could lose the deal.
Walk away. Your appraisal contingency protects you. You get your earnest money back. You start over. It stinks, but it's legal and it's clean.
Renegotiate something else. Maybe the seller pays your closing costs. Maybe they throw in the washer and dryer. Maybe they agree to cover half the gap. I've seen creative solutions, especially when both sides want the deal to work.
The key is that you're not stuck. The appraisal contingency is your escape hatch.
But if you wrote a $10,000 gap clause and the appraisal comes in $10,000 low, you don't have an escape hatch. You have a bill.
I'm seeing more low appraisals in September 2026 than I did in all of 2024 combined.
Why?
Comps are stale. In Harford and Baltimore Counties, homes that sold in March and April 2026 closed at higher prices than homes selling now. Appraisers pull comps from the last 90–180 days, and the market has softened just enough that those comps don't support today's list prices.
Sellers are testing the market. With inventory up, some sellers are listing high and hoping. Appraisers don't care about hope. They care about what similar homes actually sold for, and if your seller priced the home $20,000 above the last three sales on the street, the appraiser will call it.
Lenders are stricter. After the chaos of 2020–2023, lenders and appraisal management companies are pushing for conservative valuations. Nobody wants to be the lender holding a $320,000 loan on a $290,000 house if the buyer walks away in year two.
You can read more about how appraisal standards work on HUD's website and Freddie Mac's appraisal guidelines.
Here's the teaching moment, straight from my educator brain:
The appraisal gap clause is a promise to pay cash. Not a maybe. Not a "we'll figure it out." It's a line item on your settlement statement that pulls from your bank account, not your mortgage.
If you're already stretching to cover your down payment, don't write a gap clause you can't fund. I'd rather lose a deal in the offer stage than watch you panic three weeks before closing.
And if you're competing against other buyers and you want to write a gap clause to strengthen your offer, make sure it's real. Sellers and listing agents can smell a bluff. If you write $15,000 and then try to renegotiate the second the appraisal comes in low, you've burned trust and you might lose the deal anyway.
One thing I've started doing with buyers in 2026: we order a pre-appraisal or a desktop appraisal before we even write the offer.
It's not always possible. It costs a few hundred bucks. But if you're looking at homes for sale in Baltimore County or York County, PA, and you're worried about appraisal risk, it's worth it. You get a rough sense of value before you commit, and you can adjust your offer or your gap clause accordingly.
Not every lender allows it, and it doesn't replace the official appraisal, but it's one more data point.
The other tool: work with a Maryland realtor who actually pulls comps. Not list prices. Not Zillow estimates. Actual closed sales. I do this for every buyer before we tour a home. It takes ten minutes and it saves thousands in heartbreak later.
If you want to see what's currently available and get a realistic sense of pricing, check out my active listings here.
I had a buyer last spring who wrote a $20,000 appraisal gap clause on a home in Havre de Grace. He had the cash. He wanted the house. He thought he was being competitive.
The appraisal came in $30,000 low.
Even with his $20,000 gap, the deal fell apart. The seller wouldn't budge on the remaining $10,000, and my buyer wasn't willing to go higher. We walked.
Three weeks later, that same house went under contract again—at $25,000 less than the original price. The second buyer paid closer to appraised value and closed without drama.
The lesson? Sometimes the appraisal is right. And sometimes walking away is the smartest move you can make, gap clause or not.
We're heading into a strange season. Rates are holding steady but high. Inventory is up but buyers are cautious. Appraisals are lagging behind list prices, especially in the Maryland counties I serve: Cecil, Harford, Baltimore, Howard, Anne Arundel, Montgomery, Charles, and Baltimore City, plus D.C., Lancaster and York in Pennsylvania, and New Castle County in Delaware.
If you're thinking about making an offer, let's talk through the appraisal gap clause before you sign anything. It's one of those details that feels small until it's not.
And if you're working with a lender who hasn't explained how the appraisal process works, or if your agent glossed over the contingency section, reach out. I spent two decades teaching before I ever sold a house, and I'm not about to stop now.
You deserve to know what you're signing. And you deserve to walk into closing with your eyes open and your bank account intact.
Katrina Kirton Sherrod, REALTOR® · Samson Properties · Licensed in MD, DC, PA & DE · 443-616-9770 · Katrina@kkstherealtor.com
“The problem with waiting for the perfect house is that someone imperfect already bought it.” — Anonymous open-house guest