Appraisal myths debunked

Legally, a real estate appraiser needs to be state certified to create legitimate appraisal reports for federally-supported sales. The law gives you the right to get a copy of your finished appraisal from your lending agency after it has been provided. Contact us if you have any concerns about the appraisal procedure.

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

Fact: While most states uphold the idea 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 properties in the vicinity have not been reassessed for an prolonged period.

Myth: The value of a house will change depending upon if the appraisal is conducted for the buyer or the seller.

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

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

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 duress from any external party to purchase or sell. The dollar amount necessary to rebuild a home is what shows the replacement cost.

Myth: Specific methods, like the price per square foot, are the ways appraisers use to arrive at the cost of a property.

Fact: There are many differing calculations that an appraiser will use to make an in-depth analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to specific facilities and the cost of recently sold comparable houses.

Myth: In a powerful economy - when the prices of properties in a given region are reported to be increasing by a certain percentage - the prices of individual homes in the vicinity can be expected to increase by that same percentage.

Fact: All appreciation of value is on a case-by-case basis, found by information on relevant conditions and the data of comparable homes. It makes no difference if the economy is strong or poor.

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

Fact: To conclude an accurate price beyond all doubt, an appraiser must examine the home on a variety of factors based on location, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from simply viewing the house from the exterior.

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

Fact: Unless a lending agency releases its interest in the report, it is legally owned by the lending agency that ordered the appraisal. However, consumers have to be given a copy of the appraisal report upon written request, under the Equal Credit Opportunity Act.

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

Fact: A consumer should definitely read through their report; there may be some questions or some concerns about the accuracy of the analysis that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can double as a record for the future, since it contains an exorbitant amount of data - 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.