Appraisal myths & facts

By law, an appraiser must be state-licensed to offer appraisals for federally-supported purchases. The law allows you to receive a copy of your finished appraisal report from your lending agency after it has been produced. Contact us if you have any concerns about the appraisal process.

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

Fact: This is not often the case; most states do support the concept that the assessed value is the same as market value, but not always. There are times when interior remodeling has been done and the assessor is has not investigated the improvement or other homes in the area have not been reassessed for a good length of time, it may vary wildly.

Myth: The buyer or the seller may have impact in the cost of the home depending upon for whom the appraiser is working.

Fact: There is no personal interest on the part of the appraiser in the result of the report, therefore he will complete his work with impartiality and independence, despite for whom the appraisal is created.

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

Fact: The way market value is derived is based on what a buyer would likely pay a willing seller for a home without being under influence from any outside group to purchase or sell. The dollar amount needed to reconstruct a house is what forms the replacement cost.

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

Fact: There are many differing formulae that an appraiser will use to make an in-depth analysis of every factor pertaining to the home, such as the size, location, condition, how close it is to certain facilities and the sales price of recently sold comparable houses.

Myth: As homes appreciate by a specific percentage - in a strong economy - the houses within the same neighborhood are expected to increase by the same amount.

Fact: All increase of price is on an individual basis, concluded by information on relevant conditions and the data of comparable properties. This is true in fair economic times as well as poor.

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

Fact: There are a multitude of different variables that conclude property value; these factors include area, condition, improvements, amenities, and market trends. An outside-only inspection definitely can't provide all of the data necessary.

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

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

Myth: Home buyers need not be concerned with what is in their appraisal report so long as it exceeds the needs of their lending institution.

Fact: Only if home buyers read a copy of their report can they ensure 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 wealth of information contained in an appraisal report that will probably 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.