Appraisal myths debunked

Legally, a real estate appraiser has to be state certified to produce substantiated real estate appraisals for federally-supported sales. You also have the right to request a copy of the completed appraisal report from your lender. Contact us if you have any concerns about the appraisal procedure.

Myth: Market value should be the same as 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. Interior remodeling that the assessor has not investigated and a dearth of reassessment on nearby homes are perfect examples of why there might be a differential in price.

Myth: The buyer or the seller often will have some pull 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 appraisal report, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is written.

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

Fact: Market value is derived from what a willing buyer would likely pay a willing seller for a particular home, with neither being under undue influence to buy or sell. If the home were rebuilt, the dollar amount necessary to do so would set the replacement cost.

Myth: Appraisers use a calculation, like a specific price per square foot, to come to the value of a house.

Fact: There are many numerous ways that an appraiser will use to make a full analysis of every factor pertaining to the property, such as the size, location, condition, how close it is to undesirable facilities and the opinion of value of recently sold comparable homes.

Myth: As homes appreciate by a certain percentage - in a robust economy - the homes around the appreciating properties are figured to increase by the same amount.

Fact: Any value at which an appraiser concludes in regards to a certain house is always individualized, based on certain factors concluded from the data of comparable houses and other considerations within the property itself. It doesn't matter if the economy is doing well or declining.

Myth: Just looking at what the property looks like on the outside gives an excellent idea of its cost.

Fact: To find an accurate value beyond all doubt, an appraiser must examine the property on a variety of factors based on area, condition, improvements, amenities, and market trends. An exterior inspection obviously can't provide all of the information required.

Myth: Because consumers fund the appraisal when applying for loans to buy or refinance real estate, they legally own their appraisal report.

Fact: Legally, the report is owned by the lender unless the lender releases their interest in the appraisal. However, home buyers must be provided with a copy of the report upon written request, under the Equal Credit Opportunity Act.

Myth: Consumers need not worry about what is in their appraisal so long as it meets the needs of their lending agency.

Fact: Only if home buyers check out a copy of their appraisal 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. There is a great deal of information stored 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 region.