Common myths about appraising

Legally, a real estate appraiser is required to be state certified to produce legitimate appraisal reports for federally-related transactions. You also have the right to acquire a copy of the finished appraisal from your lending agency. Contact us if you have any questions about the appraisal process.

Myth: Assessed value will always be similar to to market value.

Fact: While most states support the idea that assessed value is equal to estimated market value, this commonly is not the case. Interior reconstruction that the assessor has not investigated and a lack of reassessment on nearby homes are prime examples of why the price can vary.

Myth: Depending on if the appraisal is provided for the buyer or the seller, the appraised value of the property will vary.

Fact: The appraised value of the house does not affect the pay of the appraiser; as such, the appraiser has no preconceived interest in the worth of the property. Obviously, he will render business with impartiality and objectivity regardless for whom the appraisal is provided.

Myth: Any time market value is established, it should be the same as the replacement cost of the home.

Fact: Market value is based on what a willing buyer would be interested in paying a willing seller for a particular house, with neither being under pressure to buy or sell. Replacement cost is the dollar amount needed to reconstruct a property in-kind.

Myth: Specific formulae, like the price per square foot of the property, are the ways appraisers use to determine the worth of a home.

Fact: There are many varied methods that an appraiser will use to make an in-depth investigation of every factor in consideration of the property, such as the size, location, condition, how close it is to certain facilities and the sales price of recently sold comparable homes.

Myth: When the economy is doing well and the worth of homes are found to be appreciating by a certain percentage, the other houses in the neighborhood can be expected to rise based on that same percentage.

Fact: Cost appreciation of a specific home is always determined on a case-by-case basis, factoring in data on comparable properties and other relevant elements. This is true in excellent economic times as well as poor.

Myth: Just examining what the home looks like on its exterior gives a good idea of its worth.

Fact: To find an accurate price beyond all doubt, an appraiser must examine the property 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 derived just by examining the house from the outside.

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

Fact: The report is, in fact, legally owned by the lending agency - unless the lender "relinquishes its interest" in the document. By the Equal Credit Opportunity Act, any home buyer asking for a copy of the appraisal report must be given one by their lender.

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

Fact: A consumer should definitely look through their appraisal; there might be some questions or some worries about the accuracy of the appraisal that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes a valuable record for future reference, comprised of useful and often-revealing information - including, but 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 proximity.