Appraisal myths & facts

By law, an appraiser needs to be state-licensed to perform appraisals for federally-related transactions. Also by law, you have the right to demand a copy of the completed appraisal report from your lending agency. Contact us if you have any questions about the appraisal process.

Myth: Market value will be similar to the assessed value of the property.

Fact: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. Examples include when interior reconstruction has occurred and the assessor does not know about the improvements, or when homes in the area have not been reassessed for an prolonged period.

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

Fact: The appraiser has no vested interest in the result of the appraisal and should render his task with independence, objectivity and impartiality - no matter for whom the appraisal is provided.

Myth: The replacement value of the home is always is on par with the market value.

Fact: The way market value is found is based on what a home buyer would be willing to pay a willing seller for a home without being under duress from any external group to buy or sell. If the house were rebuilt, the dollar amount required to do so would set the replacement cost.

Myth: There are specific ways that real estate appraisers use to show the value of a home, like the price per square foot.

Fact: There are many varied methods that an appraiser will use to make a comprehensive analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to certain facilities and the sales price of recently sold comparable properties.

Myth: When the economy is on the rise and the cost of properties are found to be appreciating by a certain percentage, the other homes in the neighborhood can be expected to rise based on that same percentage.

Fact: All increase of price is on a one-on-one basis, concluded by information on relevant conditions and the data of comparable properties. It doesn't matter if the economy is doing well or declining.

Myth: The home's exterior is determinate of the actual worth of the property; it is unnecessary to do an interior inspection.

Fact: Home worth is concluded by a multitude of factors, including area, condition, improvements, amenities, and market trends. There's no real way to get all of this information from just looking at the house from the exterior.

Myth: Since you're the one providing the money for the appraisal when applying for the loan to purchase or refinance your home, you own the produced appraisal.

Fact: Unless a lender releases its vestment in the appraisal report, it is legally owned by the lending company that purchased the appraisal. Home buyers must be given a version of the appraisal report through request due to the Equal Credit Opportunity Act.

Myth: There's no need for consumers to even worry about what the report contains so long as their lender is satisfied.

Fact: A consumer should definitely inspect their appraisal report; there will probably be some questions or some concerns about the accuracy of the appraisal report that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes an excellent record for future reference, filled with useful and often-revealing data - including 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 vicinity.