What does this clause mean to you?

[Trushit Vaishnav]

I am currently in process of buying my first home. House was listed at $329500. I included escalatory clause in my offer and got the offer at $336000. Seller asked me cover the appraisal gap, if any.  I offered to cover $5000. Here is the language they included in the contract.

Now the home appraised at $325K.

How do you interpret the above language? Does it mean that I am bound to pay $5K above appraised value? Or does it mean I still have an option to choose if I want to pay 0 - $5000K or walk away? 

I am just trying to understand what kind of leverage I have to negotiate this further.