Appraisal myths debunked

Legally, a real estate appraiser must be state certified to create substantiated real estate appraisals for federally-related sales. You are also entitled by law to acquire a copy of the finished appraisal from your lender. Contact us if you have any concerns about the appraisal procedure.

Myth: Market value has to be similar 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 often is not the case. Examples include when interior reconstruction has happened and the assessor does not know about the improvements, or when houses in the area have not been reassessed for an prolonged period of time.

Myth: The value of a property will vary depending upon if the appraisal is ordered for the buyer or the seller.

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

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

Fact: The way market value is arrived at is based on what a buyer would likely pay a willing seller for a house without being under influence from any outside group to buy or sell. Replacement cost is the dollar amount needed to reconstruct a property in-kind.

Myth: There are certain ways that appraisers use to show the cost of a home, such as the price per square foot.

Fact: There are many differing processes that an appraiser will use to make a detailed analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to undesirable facilities and the opinion of value of recently sold comparable properties.

Myth: When the economy is robust and the cost of properties are found to be appreciating by a certain percentage, the other properties in the neighborhood can be expected to increase based on that same percentage.

Fact: All increase of value is on a one-on-one basis, concluded by data on relevant conditions and the data of comparable homes. It doesn't matter if the economy is doing well or declining.

Myth: You can often tell what a property is worth simply by looking at the exterior.

Fact: To determine an accurate value beyond all doubt, an appraiser must examine the house on a variety of factors based on area, condition, improvements, amenities, and current market trends. As you can see, none of these things can be found just by looking at the home from the outside.

Myth: Because consumers pay for the appraisal when applying for loans to purchase or refinance real estate, they own their appraisal.

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

Myth: There's no point for home buyers to even care about what the report contains so long as their lending agency is satisfied.

Fact: Only if home buyers examine a copy of their 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 an incredible amount of information stored in an appraisal 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.