Thank you for asking this question / making these comments. I'm sure many real estate agents have represented sellers where the home has not appraised. It is then up to the buyer to bring more cash to closing, the seller to lower the price, or some kind of compromise. While some buyers are okay with paying more for a home than the appraised value, other buyers are not okay with this. These buyers move on and decide to purchase another home.
As for the low inventory we have in many communities today, this could be a result of many factors. One of the factors is that sellers are waiting for the market value of their home to increase before selling. While this is a good strategy if the seller is moving to an area with high inventory and lower prices, this does not work as well for those who are staying local and want to "move up". As the value of their home goes up, so do all the others. However, some sellers may need to wait because they do not have the equity in their home to coverr their mortgage value and do not qualify for a short sale or want to do this.
Other factors leading to lower inventory is that fewer people "need" to move right now. Companies are likely not paying to transfer employees as often as in prior years, and people are not as likely to change jobs as frequently because they want to build up a little seniority...and hopefully, job security or improved benefits.
These are just some examples of why our inventory is low. This discussion can go on for a long time, and is discussed by economists all the time.
And believe me, I wish I could sell homes for a higher value...but usually the market determines the fair market value of homes.
Alain Pinel Realtors - Pleasanton