Common myths about appraising

Legally, a real estate appraiser needs to be state certified to perform legitimate real estate appraisals for federally-supported transactions. The law entitles you to get a copy of your completed report from your lending agency after it has been provided. Contact our professional staff if you have any questions about the appraisal process.

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

Fact: While most states support the concept that assessed value is the same as estimated market value, this usually is not the case. Interior remodeling that the assessor is unaware of and a dearth of reassessment on nearby homes are perfect examples of why the price can vary.

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

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

Myth: Market value will be the same as replacement cost.

Fact: Without any pressure from any external parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a particular house. The dollar amount needed to reconstruct a property is what constitutes the replacement cost.

Myth: Certain formulae, such as the price per square foot of the property, are what appraisers use to ascertain the worth of a home.

Fact: There are many differing calculations that an appraiser will use to make a full analysis of every factor in consideration of the home, such as the size, location, condition, how close it is to certain facilities and the worth of recently sold comparable houses.

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

Fact: Value appreciation of a certain house is always concluded on an individualized basis, factoring in data on comparable homes and other relevant specifications within the property itself. 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 property; there is no need to do an interior inspection.

Fact: There are a multitude of different factors that determine the value of a home; these factors include location, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from just inspecting the home from the outside.

Myth: Considering that the consumer is the person who puts up the capital to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal is theirs.

Fact: Unless a lending agency releases its vestment in the appraisal report, it is legally owned by the lending company that ordered the appraisal. However, home buyers have to be supplied with a copy of the appraisal report upon written request, due to the Equal Credit Opportunity Act.

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

Fact: Only if home buyers check out 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. There is a great deal of data contained in an appraisal report that can be useful to the home buyer 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 proximity.