When values are rising, paying a little more than the appraised value is not usually a major issue. Appreciation will probably make up the difference in a short time. But you should be more sensitive to overpaying, even by a small amount, when values are stable or declining. You risk not being able to sell for that amount if property values decline permanently or if you have to sell suddenly. Paying a little more than the appraised value is not unwise, however, if you have looked for a while without success and you are sure you will not have to move again soon. It is not always easy to find a home that suits your needs and by the time you sell, you may very well sell for more.