Appraisal myths & facts

By law, an appraiser is enforced to be state-licensed to produce appraisals for federally-related purchases. Also by law, you are allowed to receive a copy of the completed appraisal report from your lending agency. Contact our professional staff if you have any questions about the appraisal procedure.

Myth: Market value will always be equivocal to the assessed value of the property.

Fact: While most states support the idea that assessed value is equal to estimated market value, this usually is not the case. Examples include when interior reconstruction has happened and the assessor does not know about the improvements, or when properties in the area have not been reassessed for an extended time.

Myth: The appraised value of a home will be different depending upon whether the appraisal is provided for the buyer or the seller.

Fact: The appraised value of the home does not affect the payment of the appraiser; because of this, the appraiser has no personal interest in the value of the property. Obviously, he will render job with impartiality and objectivity regardless for whom the appraisal is created.

Myth: Market value will equal replacement cost.

Fact: Market value is found by what a willing buyer would likely pay a willing seller for a specific home, with neither being under pressure to buy or sell. The dollar amount required to reconstruct a home is what shows the replacement cost.

Myth: There are certain ways that real estate appraisers use to determine the value of a home, like the price per square foot.

Fact: Appraisers make a comprehensive analysis of all factors pertaining to the cost of a property, including its location, condition, size, proximity to facilities and recent sale prices of comparable houses.

Myth: In a robust economy - when the worth of properties in a given region are reported to be rising by a particular percentage - the prices of individual properties in the proximity can be expected to appreciate by that same percentage.

Fact: Any worth at which an appraiser concludes in regards to a particular property is always personalized, based on certain factors pulled from the data of comparable homes and other specifications within the house itself. It makes no difference if the economy is robust or poor.

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

Fact: Home value is determined by a multitude of factors, including location, condition, improvements, amenities, and market trends. An exterior inspection obviously can't provide all of the information needed.

Myth: Considering that the consumer is the person who provides the funding to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal report belongs to them.

Fact: The appraisal is, in fact, legally owned by the lending company - unless the lender "relinquishes its interest" in the appraisal. Home buyers have to be given a version of the document through request due to the Equal Credit Opportunity Act.

Myth: There's no need for consumers to even concern themselves with what the report contains so long as their lender is fine with the contents therein.

Fact: It is almost imperative for home buyers to check over a copy of their appraisal so that they can verify the accuracy of the document, in case it's required to question its accuracy. 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 report that can be useful to the consumer 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 vicinity.