Common myths about appraising

Legally, a real estate appraiser has to be state certified to perform legitimate appraisal reports for federally-supported sales. Also by law, you are entitled to demand a copy of the finished report from your lending agency. Contact our professional staff if you have any concerns about the appraisal process.

Myth: Assessed value will always be equal to market value.

Fact: This is not often the case; most states do support the concept that the assessed value is the same as market value, but not always. Examples include when interior remodeling has occurred and the assessor has not seen the improvements, or when properties in the vicinity have not been reassessed for an prolonged time.

Myth: Depending on if the appraisal is written for the buyer or the seller, the appraised value of the house will vary.

Fact: The value of the property does not affect the payment of the appraiser; because of this, the appraiser has no preconceived interest in the cost of the house. Obviously, he will render task with impartiality and independence regardless for whom the appraisal is produced.

Myth: Any time market value is found, it should equal the replacement cost of the home.

Fact: Market value is derived from what a willing buyer would likely pay a willing seller for a particular house, with neither being under undue influence to buy or sell. If the house were rebuilt, the dollar amount required to do so would make up the replacement cost.

Myth: There are specific ways that appraisers use to determine the cost of a home, like the price per square foot.

Fact: Appraisers make a full analysis of all factors in consideration to the price of a house, including its location, condition, size, proximity to facilities and recent sale prices of comparable homes.

Myth: In a powerful economy - when the prices of homes in a given area are reported to be appreciating by a certain percentage - the prices of individual houses in the vicinity can be expected to increase by that same percentage.

Fact: All appreciation of worth is on a one-on-one basis, determined by data on relevant considerations and the data of comparable houses. It doesn't matter if the economy is on the rise or declining.

Myth: The home's outside is determinate of the actual price of the home; there is no need to do an interior appraisal.

Fact: To determine an accurate price beyond all doubt, an appraiser must assess the home on a variety of factors based on location, condition, improvements, amenities, and market trends. Obviously, none of these things can be found simply by inspecting the home from the outside.

Myth: Because consumers pay for appraisal reports when applying for loans to purchase or refinance their home, they own their appraisal report.

Fact: Unless a lending agency releases its interest in the appraisal report, it is legally owned by the lending company that purchased the appraisal. Consumers must be provided with a copy of the report through request as per the Equal Credit Opportunity Act.

Myth: There's no point for consumers to even concern themselves with what the appraisal report contains so long as their lending institution is fine with the contents therein.

Fact: It is very important for home buyers to look at a copy of their appraisal report so that they can double-check the accuracy of the document, in case there is a need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can serve as a record for the future, containing a great deal of information - including, but not limited to 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 area.