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GAP Clause in Real Estate

Are you familiar with the ‘GAP clause’ in real estate?

When home prices accelerate quickly, appraisals may not reflect current values. An appraisal gap clause is an addendum to a contract. It confirms that the buyer will cover any difference between a home’s appraised value and their offer. It gives sellers comfort in knowing a contract won’t fall through because of a low appraisal and it protects against buyers backing out. An appraisal gap clause in your offer means you’ll buy the home even if it appraises lower than your offer. Now I recommend avoiding this because a market correction could create a situation where you’re “upside-down” on your home or you have “negative equity.” You would owe more or have more invested in your home than it’s really worth. Another option is to cap how much you’re willing to pay to cover the gap. This prevents you from spending more than you can really afford. An “appraisal contingency” is far safer. If the appraised value does not match the offer, a buyer can back out of the contract and keep their earnest money.

Overextending to buy a house can cause enormous stress that’s unhealthy for a marriage and family. For many, this is a good time to be patient and wait on the Lord. He knows your needs and will guide you to the best home for you in His time. Psalm 37:4 says, “Delight yourself in the Lord, and he will give you the desires of your heart. Commit your way to the Lord; trust in him, and he will act.” Ponder this promise as you wait on the Lord to lead you to the right home. 

My newest book, Economic Evidence for God is a great resource for those wanting to better understand the way your personal economy works as well as the global economy from a Biblical perspective. It is available now at A positive review will be appreciated.