Appraisal myths debunked

By law, an appraiser must be state-licensed to perform appraisals for federally-backed sales. You are also entitled by law to demand a copy of the completed appraisal from your lender. Contact our professional staff if you have any questions about the appraisal process.

Myth: Market value should be the same as the assessed value of the property.

Fact: This usually isn't true; most states do support the idea that the assessed value is the same as market value, but not always. Examples include when interior remodeling has happened and the assessor has not seen the improvements, or when houses in the vicinity have not been reassessed for an prolonged time.

Myth: The appraised value of a property will change depending upon if the appraisal is conducted for the buyer or the seller.

Fact: There is no real interest on the part of the appraiser in the result of the analysis, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is conducted.

Myth: Market value will approximate replacement cost.

Fact: Market value is based on what a willing buyer would likely pay a willing seller for a specific home, with neither being under duress to buy or sell. If the home were reconstructed, the dollar amount needed to do so would be the replacement cost.

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

Fact: There are many varied calculations that an appraiser will use to make a comprehensive investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to specific facilities and the opinion of value of recently sold comparable houses.

Myth: When the economy is doing well and the worth of homes are reported to be rising by a certain percentage, the other homes in the vicinity can be expected to appreciate based on that same percentage.

Fact: Value appreciation of a certain house has to be determined on a case-by-case basis, factoring in information on comparable houses and other relevant elements. It makes no difference if the economy is strong or on the decline.

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

Fact: Property value is concluded by a multitude of variables, including area, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from just looking at the home from the outside.

Myth: Because consumers pay for appraisals when applying for loans to buy or refinance their house, they legally own their appraisal report.

Fact: Legally, the report is owned by the lender unless the lender relinquishes their interest in the document. Consumers must be provided with a copy of the appraisal report upon written request due to the Equal Credit Opportunity Act.

Myth: It doesn't matter to consumers what's in the appraisal so long as it meets the needs of their lender.

Fact: Only if home buyers read a copy of their appraisal report can they verify its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can serve as a record for the future, as it contains an exorbitant amount 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 proximity.