The Appraisal:

Appraised value is a certified appraiser's opinion of a home's worth at a given point in time. Market value is what price the house will actually bring at a given point in time. A comparative market analysis, which is performed by a real estate agent or broker, is an informal estimate of market value based on sales of nearby comparable properties. Lenders require appraisals as part of the loan application process; fees generally range from $200 to $400.

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.