Appraisal myths & facts

Legally, an appraiser must be state certified to write substantiated real estate appraisals for federally-backed transactions. The law entitles you to get a copy of your completed appraisal from your lending agency after it has been provided. Contact our professional staff if you have any questions about the appraisal procedure.

Myth: Market value needs to be similar to the assessed value of the property.

Fact: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. Interior reconstruction that the assessor is not aware of and a lack of reassessment on nearby houses are exact examples of why there might be a differential in price.

Myth: Depending on whether the appraisal is drawn up for the buyer or the seller, the cost of the house will vary.

Fact: The value of the property does not affect the salary of the appraiser; due to this, the appraiser has no pressured interest in the worth of the home. This means that he will provide business with impartiality and independence regardless for whom the appraisal is conducted.

Myth: The replacement value of the property should be is on par with the market value.

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 influence from any external party to purchase or sell. The dollar amount demanded to rebuild a house is what shows the replacement cost.

Myth: Appraisers use a formula, like a certain price per square foot, to come to the cost of a house.

Fact: Appraisers make an exhaustive analysis of all factors in consideration to the price of a home, including its location, condition, size, proximity to facilities and recent sale prices of comparable houses.

Myth: In a robust economy - when the costs of houses in a given neighborhood are reported to be increasing by a particular percentage - the prices of individual homes in the area can be expected to rise by that same percentage.

Fact: All appreciation of value is on an individual basis, determined by information on relevant elements and the data of comparable houses. It makes no difference whether the economy is excellent or terrible.

Myth: The home's outside is determinate of the actual value of the house; it is unnecessary to do an interior inspection.

Fact: To find an accurate value beyond all doubt, an appraiser must inspect the home on a variety of factors based on location, condition, improvements, amenities, and current market trends. There's no possible way to get all of this data from simply looking at the home from the exterior.

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

Fact: The report is, in fact, legally owned by the lending company - unless the lender "relinquishes its interest" in the appraisal report. However, home buyers must be supplied with a copy of the appraisal upon written request, because of the Equal Credit Opportunity Act.

Myth: Consumers need not be concerned with what is in their document so long as it exceeds the requirements of their lending company.

Fact: Only if home buyers look over 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 a wealth of data contained in an appraisal that could 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.