If you remove your appraisal contingency and have to put in another $30,000 to bring in the loan, you could easily be "upside down" as far as your equity is concerned. That $30,000, if that is what the difference is, goes into a black hole of worthlessness, unless the value of the home keeps increasing. Remember that? It's called 2006.
By reading this article you may be lead to think , "Oh, in all those areas with the lightest shading prices are not increasing so quickly. We'll start looking there." Good thought, but the map does not address the issue that is primarily driving prices up: lack of inventory. Nearly all these areas has a shortage of inventory. Homes in decent condition here in Long Beach, priced under $600,000, can expect to receive offers within three days. Under $400,000, it is likely to see an offer the day the listing goes live. One agent this month put a property on the market in North Long Beach. It was a simple home with 2 bedrooms and 1 bathroom. It was clean and not in need of major repairs. She received sixteen offers, six of which were cash offers from investors, and the price immediately got driven up by $45,000. Nothing in the area could support that price, but for a cash offer, there is no dependency on the appraisal for the bank to approve the loan. On the other hand, with such limited inventory, it is difficult for these high prices to drive the entire market up either.
What to do? Seek the advice of a trusted realtor who knows the area. He or she can tell you what the value of the property would be from a "normal" trend. See the properties and if they all are over priced, ask yourself, "Can I afford this mortgage long term? Will I be able to live here even if the value goes below what I paid?" A home is a long term investment, and the great deals from short sales and foreclosed homes is all but over. As a long-term investment, your home is much more likely to be well worth it.
History is so very recent. It's easy to look back and benefit from it. After all, even with this upturn, we are still going through more