Appraisal myths & facts

Legally, a real estate appraiser has to be state certified to produce substantiated real estate appraisals for federally-related sales. Also by law, you are entitled to demand a copy of the finished report from your lending agency. Contact us if you have any questions about the appraisal procedure.

Myth: The value that is assessed by the appraiser must be exactly the same as the market value.

Fact: This usually isn't true; most states do support the idea that the assessed value is the same as market value, but not always. Interior remodeling that the assessor has not investigated and a dearth of reassessment on nearby properties are excellent examples of why there might be a differential in price.

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

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

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

Fact: The way market value is derived is based on what a home buyer would be willing to pay a willing seller for a home without being under duress from any external group to purchase or sell. The dollar amount necessary to rebuild a house is what forms the replacement cost.

Myth: There are certain methods that appraisers use to determine the cost of a property, like the price per square foot.

Fact: Appraisers complete a detailed analysis of all factors pertaining to the cost of a house, including its location, condition, size, proximity to facilities and recent worth of comparable houses.

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

Fact: Cost appreciation of a specific house has to be concluded on an individualized basis, factoring in data on comparable houses and other relevant elements. It makes no difference if the economy is robust or terrible.

Myth: The property's outside is determinate of the actual worth of the home; it is unnecessary to do an interior appraisal.

Fact: To determine an accurate worth beyond all doubt, an appraiser must examine the property on a variety of factors based on area, condition, improvements, amenities, and current market trends. An external inspection definitely can't provide all of the data needed.

Myth: Because the consumer is the party who puts up the funding to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report is theirs.

Fact: The appraisal report is, in fact, legally owned by the lender - unless the lender "releases its interest" in the appraisal. Consumers have to be given a copy of the appraisal report through request as per the Equal Credit Opportunity Act.

Myth: There's no need for consumers to even worry about what the appraisal report contains so long as their lending company is satisfied.

Fact: Only if home buyers examine a copy of their report can they ensure its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can serve as a record for the future, since it contains an exorbitant amount of information - 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 proximity.