"I don't think that anyone can assume that the appraised value of their home is based on reality," said research director David Callahan of Demos, a public-policy center in New York. "Appraisal fraud is so common that homeowners need to assume the opposite." Demos released a report about appraisal fraud in March, sparking intense discussion in the real-estate media.
No one knows exactly how often appraisers tinker with reality. But reports suggest they face enormous pressure to tweak their numbers. Some observers predict they'll face even more if the real-estate market cools.