What is an inflated appraisal?

An inflated appraisal refers to an assessment that assigns a value to a property that exceeds its actual worth in the market. This often occurs when appraisers are influenced by buyers or sellers to increase a property's value for various reasons, such as enabling a buyer to secure a larger mortgage or advancing a seller's negotiation position. Inflated appraisals can distort the market and lead to buyer dissatisfaction or financial strain when the property's real value is recognized.

The other choices do not accurately describe inflated appraisals. For instance, valuing below market price indicates an undervalued appraisal, while additional costs for renovations pertain only to specific property enhancements rather than the overall appraisal value. Reflecting the highest sale price in the area may not indicate inflated values, as it could represent true market conditions; it depends on broader market analyses. Therefore, recognizing an inflated appraisal as one that overstates property value is crucial for understanding market dynamics and ensuring fair transactions.