Appraisal myths debunked

By law, an appraiser is required to be state-licensed to offer appraisals for federally-backed purchases. You also have the right to acquire a copy of the completed report from your lending agency. Contact us if you have any questions about the appraisal procedure.

Myth: Assessed value should be the same as to market value.

Fact: While most states support the suggestion that assessed value equates estimated market value, this commonly is not the case. Examples include when interior remodeling has occurred and the assessor has not seen the improvements, or when homes in the vicinity have not been reassessed for an extended period.

Myth: Depending on if the appraisal is produced for the buyer or the seller, the opinion of value of the house will vary.

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

Myth: Market value will equal replacement cost.

Fact: The way market value is found is based on what a 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 property were reconstructed, the dollar amount required to do so would be the replacement cost.

Myth: Appraisers use a formula, like a specific price per square foot, to come to the cost of a home.

Fact: Appraisers make an exhaustive analysis of all factors in consideration to the worth of a home, including its location, condition, size, proximity to facilities and recent values of comparable properties.

Myth: In a robust economy - when the prices of homes in a given county are found to be appreciating by a certain percentage - the costs of individual properties in the proximity can be expected to appreciate by that same percentage.

Fact: Any cost at which an appraiser concludes concerning a particular property is always individualized, based on certain factors concluded from the information of comparable houses and other specifications within the house itself. It makes no difference if the economy is strong or on the decline.

Myth: Just looking at what the home looks like on its exterior gives an idea of its cost.

Fact: There are a number of different factors that show the value of a house; these factors include area, condition, improvements, amenities, and market trends. Obviously, none of these things can be derived just by examining the home from the exterior.

Myth: Because consumers fund the appraisal when applying for loans to purchase or refinance their property, they own their appraisal.

Fact: Unless a lender releases its vestment in the document, it is legally owned by the lending agency that ordered the appraisal. Due the Equal Credit Opportunity Act, any home buyer asking for a copy of the appraisal report must be given one by their lending agency.

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

Fact: Only if consumers examine a copy of their report can they double-check 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 appraisal report can double as a record for the future, containing an incredible amount of information - including, but certainly 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 vicinity.