What is the potential effect of erroneous appraisals on home buyers?

Erroneous appraisals can significantly impact home buyers by providing misleading information that may affect their purchasing decisions. When an appraisal inaccurately assesses a property's value—whether overestimating or underestimating—it can lead buyers to make ill-informed choices. For instance, if a property is appraised too high, buyers may pay more than its actual value, potentially leading to financial strain or issues with mortgage lenders who may not agree to finance the inflated amount. Conversely, if a property is undervalued, buyers might overlook a great opportunity, thinking the property isn't worth the investment. This distortion in the perception of value can create significant challenges in the home buying process, prompting buyers to either make poor financial commitments or miss out on their ideal home.

The other options indicate benefits that do not arise from erroneous appraisals. Increased financial security, greater investment opportunities, and improved property appreciation are scenarios that generally stem from accurate appraisals that reflect true market conditions, rather than results based on flawed evaluations.