Real Estate Appraisals May Now Be Too High

New Headache For Homeowners: Inflated Appraisals: Rosy Valuations, Common In Boom, Now Haunt Sellers; It's Pay-the-Piper Time is the story by James R. Hagerty and Ruth Simon in the WALL STREET JOURNAL, Weekend Edition
July 22, 2006; Page A1
"As the housing market cools, Americans are confronting a problem that was easy to ignore during the boom: inflated appraisals of home values. Critics inside and outside the appraisal business have long warned that many appraisals are unrealistically high. That's partly because generous appraisals help loan officers and mortgage brokers, who often choose the appraiser, complete more deals. If a home is appraised at less than the buyer offered, the deal is likely to fall through. 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."
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