You are walking through a property, the listing agent is pointing out the features. You think the price is a little high. The agent says, "Oh no. I can show you the appraisal on this property- the owner is asking $20,000 under the appraised value!" Are you impressed? You shouldn’t be.
You are thinking about a HELOC, and talking to a loan officer. You are wondering about your chances, since you figure you owe what the place is worth. But the loan officer says, "Oh I can get an appraisal for $25,000 over that figure." Is she doing you a favor? Don’t count on it.
In a market with escalating appreciation, there was generally a limit to how much trouble a homeowner could get into. According to today’s AZ Republic, Inflated appraisals didn’t matter much when home prices were rising at double-digit rates, since market values would quickly catch up. Now, however, prices are leveling off in many places and falling in some. Some homeowners are finding that the market value is below what past appraisals led them to believe.
