Appraisal myths & facts

It is enforced by legal agencies that an appraiser is required to be state-licensed to perform appraisals for federally-related home sales in California. The law gives you the right to get a copy of your finished report from your lender after it has been provided. Contact our professional staff if you have any questions about the appraisal process.

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

Fact: It might be that California, like most states, validates the suggestion that the assessed value equates to the market value; however, this is not always true. Examples include when interior reconstruction has happened and the assessor has not seen the improvements, or when houses in the area have not been reassessed for an extended time.

Myth: The buyer or the seller sometimes may have impact in the cost of the property depending upon for whom the appraiser is working.

Fact: The appraiser has no vested interest in the outcome of the appraisal report and should render services with independence, objectivity and impartiality - no matter for whom the appraisal is provided.

Myth: Any time market value is established, it should be similar to the replacement cost of the house.

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

Myth: There are specific methods that appraisers use to find the value of a property, such as the price per square foot.

Fact: Appraisers complete an exhaustive analysis of all factors in consideration to the value of a property, including its location, condition, size, proximity to facilities and recent values of comparable homes.

Myth: As homes increase their worth by a specific percentage - in a strong economy - the properties in proximity are expected to increase by the same amount.

Fact: Worth increase of a certain property is always determined on a case-by-case basis, factoring in data on comparable houses and other relevant specifications within the property itself. It makes no difference whether the economy is strong or bad.

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

Fact: To determine an accurate price 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 information from just viewing the property from the exterior.

Myth: Because the consumer is the one who puts up the capital to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.

Fact: Unless a lender releases its vestment in the report, it is legally owned by the lending company that purchased the appraisal. Due the Equal Credit Opportunity Act, any consumer asking for a copy of the appraisal report must be provided with one by their lending agency.

Myth: Home buyers need not worry about what is in their appraisal document so long as it meets the necessities of their lending institution.

Fact: A consumer should definitely inspect their appraisal; there may be some questions or some worries about the accuracy of the appraisal report that should 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 a great deal of data - 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 area.