Appraisal myths debunked

Legally, a real estate appraiser has to be state certified to perform substantiated appraisal reports for federally-supported transactions. You also have the right to receive a copy of the finished appraisal report from your lending agency. Contact our professional staff if you have any questions about the appraisal procedure.

Myth: The value that is assessed by the appraiser should be equivalent to the market value.

Fact: While most states support the idea that assessed value is equal to estimated market value, this often is not the case. Examples include when interior remodeling has happened and the assessor has not seen the improvements, or when properties in the vicinity have not been reassessed for an extended period of time.

Myth: The value of a house will vary depending upon if the appraisal is provided for the buyer or the seller.

Fact: There is no vested interest on the part of the appraiser in the outcome of the appraisal report, therefore he will conduct his work with impartiality and independence, regardless for whom the appraisal is conducted.

Myth: Market value should approximate replacement cost.

Fact: The way market value is derived is based on what a buyer would be willing to pay a willing seller for a home without being under pressure from any external party to purchase or sell. If the property were rebuilt, the dollar amount necessary to do so would be the replacement cost.

Myth: Appraisers use a formula, such as a certain price per square foot, to come to the worth of a property.

Fact: There are many numerous formulae that an appraiser will use to make a detailed analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to specific facilities and the worth of recently sold comparable houses.

Myth: When the economy is on the rise and the sales prices of houses are reported to be increasing by a certain percentage, the other houses in the neighborhood can be expected to rise based on that same percentage.

Fact: Cost increase of a certain home has to be determined on a case-by-case basis, factoring in data on comparable homes and other relevant specifications within the house itself. This is true in fair economic times as well as bad.

Myth: You can often find what a home is worth simply by looking at the exterior.

Fact: Home value is determined by a number of factors, including - but not limited to - location, condition, improvements, amenities, and market trends. An outside-only inspection obviously can't provide all of the data needed.

Myth: Because the consumer is the person who provides the capital to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report is theirs.

Fact: Unless a lender releases its vestment in the report, it is legally owned by the lending agency that purchased the appraisal. Because of the Equal Credit Opportunity Act, any consumer asking for a copy of the report must be given it by their lender.

Myth: It doesn't concern consumers what's in the report so long as it meets the necessities of their lender.

Fact: A home buyer should definitely read through their appraisal; there might be some questions or some worries about the accuracy of the appraisal report that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of information contained in an report that will probably be useful to the home buyer in the future, such as the legal and physical description of the property, square footage measurements, list of comparable properties in the neighborhood, neighborhood description and a narrative of current real-estate activity and/or market trends in the proximity.