The appraisal at the centre of it is ordered by the lender and usually prepared by an Appraisal Institute of Canada designated appraiser. For a buyer, the clause is a competitive tool with a real price. It tells a seller your offer will survive a valuation that comes in under the contract price, which is reassurance in a multiple offer situation. It also commits money you may not have. Never agree to an unlimited gap, and never agree to any figure you could not write a cheque for on the day of possession alongside legal fees of $800 to $1,500 and the usual adjustments.
For a seller, the reassurance is only as good as the buyer's actual liquidity. A clause promising to cover a shortfall from a buyer with nothing behind the down payment produces a collapsed deal with extra steps. If an offer includes one, ask what evidence of funds accompanies it and have your own lawyer, regulated by the Law Society of Saskatchewan, review the wording before you accept.
In practice the better answer for most Saskatoon buyers is a carefully written financing condition and an offer price the comparables support. Ask your agent to show you the sold evidence for the number you are about to commit to, and if you are the seller, price against genuine comparables and documented improvements so a low appraisal never becomes the deciding event.