Common myths about appraising

By law, an appraiser must be state-licensed to produce appraisals for federally-backed transactions. Also by law, you are entitled to receive a copy of the finished appraisal report from your lender. Contact our professional staff if you have any questions about the appraisal procedure.

Myth: The value that is ascertained by the appraiser should be the same as the market value.

Fact: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always. Examples include when interior remodeling has happened and the assessor is unaware of the improvements, or when homes in the vicinity have not been reassessed for an prolonged period of time.

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

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

Myth: Market value will approximate replacement cost.

Fact: The way market value is arrived at is based on what a buyer would be willing to pay a willing seller for a property without being under influence from any external party to buy or sell. Replacement value is the dollar amount required to rebuild a property in-kind.

Myth: Specific methods, like the price per square foot of the property, are what appraisers use to ascertain the price of a house.

Fact: There are many varied processes that an appraiser will use to make a detailed analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to certain facilities and the worth of recently sold comparable homes.

Myth: As houses increase their worth by a specific percentage - in a strong economy - the houses nearby are expected to appreciate by the same amount.

Fact: All increase of worth is on an individual basis, concluded by data on relevant elements and the data of comparable properties. It makes no difference whether the economy is robust or bad.

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

Fact: Property worth is concluded by a number of variables, including - but not limited to - location, condition, improvements, amenities, and market trends. Obviously, none of these factors can be found simply by examining the property from the outside.

Myth: Since you're the one funding for the appraisal when applying for the loan to purchase or refinance real estate, you own the ordered appraisal.

Fact: Legally, the appraisal report is owned by the lender unless the lender releases their interest in the document. However, consumers have to be provided with a copy of the appraisal upon written request, under the Equal Credit Opportunity Act.

Myth: It doesn't mean anything to consumers what's in the appraisal so long as it satisfies the requirements of their lending company.

Fact: It is very important for home buyers to read a copy of their appraisal so that they can double-check the accuracy of the report, in case there is a need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can double as a record for the future, containing a great deal 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 proximity.