I had a transaction recently where the buyer got an accepted offer on a Fannie Mae owned home for $160k. The appraisal came in at $115k and now the seller says they'll only accept Homepath financing (no appraisal required) at the agreed price of $160k. They buyer cancelled the deal, but had he not ordered the appraisal, he may have decided to pay (finance) the $160k. This is good for Fannie Mae since, without the appraisal, they can accept the highest offer and sell the home for more than the appraised value. Buyers applying the principle of substitution would realize they could buy another similar home in the vicinity for about $115k not $160k. However, later on when comps are pulled for another transaction in the neighborhood, records will show this home sold for $160k and not appraised value of $115k. If this practice on Fannie Mae homes becomes widespread, I believe we may see home values in some neighborhoods artificially inflated.