Appraisal myths debunked

Legally, a real estate appraiser needs to be state certified to write substantiated appraisal reports for federally-backed transactions. You are also entitled by law to request a copy of the finished appraisal report from your lender. Contact our professional staff if you have any concerns about the appraisal procedure.

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

Fact: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always. Often when interior remodeling has been done and the assessor is has not investigated the improvement or other houses in the area have not been reassessed for quite some time, it may vary wildly.

Myth: Depending on whether the appraisal is ordered for the buyer or the seller, the cost of the home will vary.

Fact: The cost of the home does not affect the payment of the appraiser; because of this, the appraiser has no vested interest in the value of the home. Obviously, he will render job with impartiality and objectivity regardless for whom the appraisal is provided.

Myth: Any time market value is established, it should be the same as the replacement cost of the property.

Fact: The way market value is derived is based on what a home buyer would be willing to pay a willing seller for a home without being under influence from any external group to purchase or sell. Replacement value is the dollar amount necessary to rebuild a house in-kind.

Myth: Appraisers use a formula, such as a certain price per square foot, to conclude the value of a home.

Fact: There are many different formulae that an appraiser will use to make an in-depth investigation of every factor in consideration of the property, such as the size, location, condition, how close it is to specific facilities and the sales price of recently sold comparable properties.

Myth: In a strong economy - when the prices of properties in a given region are found to be appreciating by a particular percentage - the values of individual homes in the vicinity can be expected to rise by that same percentage.

Fact: Price appreciation of a specific home is always determined on a case-by-case basis, factoring in information on comparable properties and other relevant considerations. It doesn't matter if the economy is on the rise or declining.

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

Fact: There are a multitude of different variables that determine property value; these factors include location, condition, improvements, amenities, and market trends. As you can see, none of these factors can be found simply by viewing the house from the outside.

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

Fact: Legally, the appraisal report is owned by the lender unless the lender releases their interest in the report. Consumers have to be supplied with a copy of the appraisal report upon written request as per the Equal Credit Opportunity Act.

Myth: Home buyers need not worry about what is in their appraisal document so long as it satisfies the necessities of their lending agency.

Fact: It is very important for consumers to look at a copy of their report so that they can verify the accuracy of the document, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes an excellent record for future reference, comprised of useful and often-revealing 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 proximity.