The danger of appraisal inflation is not apparent to many consumers.

The consumer begins to believe the inflated value as valid and it is validated each time the property is over-appraised. When its time to cash out, the fall from the clouds can be unforgiving.

But problems arise when the appraisal is higher than the home’s actual value. Such overvaluation can lead homeowners to overborrow. And later, when they resell, they could learn that the till they thought was full of money contains much less — or nothing at all.

At the end of the day, the homeowner just wants the job done. Herein lies the problem.

Its called “detached from reality.” The mortgage is not being done for the homeowner at all. Its being done on the lender’s behalf to assess the collateral. However, the typical lender sees the report only after it has been through the food chain.

See: The beginning of the end, or how this mess got started

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2 Responses to “Just Get – R – Done”

  1. Elizabeth says:

    I think that it is unfortunate that inflation happens at all, but even worse that sometimes the mortgage brokers encourage it. They want the client to get the loan because if it falls through, so does their commission. There have been too many times that I have seen mortgage broker’s fight for an appraisal value to be raised so that their client’s loan will be approved and, no matter what they might tell you, the truth of the matter is that they just want their money.

  2. Ashish Shah says:

    That’s true. Mortgage brokers, like real estate agents, only care about closing to secure their commissions. It’s become a volume game and a closing game that ignores the interests of the buyer and seller. Many appraisers are caught up in this racket, as well.