Appraisal gap coverage is when a buyer agrees to pay a fixed amount above the appraised value if necessary. For example, a $10,000 appraisal gap coverage means you cover up to ten thousand dollars beyond appraisal to keep the deal alive. This can increase your offer's attractiveness to a seller in competitive markets. However, it increases your risk by potentially having to fund more upfront. Carefully assess your budget before including appraisal gap coverage in your offer.