Appraisal myths & facts

Legally, an appraiser must be state certified to perform substantiated real estate appraisals for federally-related transactions. You have the ability to demand a copy of the completed report from your lender. Contact us if you have any questions about the appraisal procedure.

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

Fact: While most states back the suggestion that assessed value approximates estimated market value, this often is not the case. Interior remodeling that the assessor has not investigated and a dearth of reassessment on nearby homes are prime examples of why there might be a differential in price.

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

Fact: The appraiser has no personal interest in the result of the appraisal report and should conduct his job with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.

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

Fact: Market value is acquired by what a willing buyer would likely pay a willing seller for a certain house, with neither being under undue influence to buy or sell. If the home were rebuilt, the dollar amount needed to do so would set the replacement cost.

Myth: Appraisers use a calculation, such as a certain price per square foot, to arrive at the worth of a house.

Fact: There are many numerous calculations that an appraiser will use to make a full analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to specific facilities and the cost of recently sold comparable properties.

Myth: In a strong economy - when the sales prices of homes in a given neighborhood are reported to be increasing by a certain percentage - the costs of individual homes in the area can be expected to appreciate by that same percentage.

Fact: All appreciation of price is on a one-on-one basis, concluded by information on relevant conditions and the data of comparable homes. This is true in fair economic times as well as bad.

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

Fact: To find an accurate price beyond all doubt, an appraiser must assess the property on a variety of factors based on location, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from simply viewing the property from the exterior.

Myth: Since you're the one coughing up the cash for the appraisal report when applying for your loan to purchase or refinance your house, you own the provided appraisal report.

Fact: The document is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the appraisal. By the Equal Credit Opportunity Act, any consumer demanding a copy of the document must be given it by their lending company.

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

Fact: A consumer should definitely look through their report; there could be some questions or some worries about the accuracy of the analysis 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 data stored in an appraisal that should be useful to the consumer 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 area.