Common myths about appraising

It is enforced by legal agencies that a real estate appraiser is required to be state-licensed to produce appraisals for federally-supported real estate purchases in California. Also by law, you have the right to demand a copy of the finished report from your lending agency. Contact us if you have any questions about the appraisal process.

Myth: Assessed value should equate to market value.

Fact: While most states support the concept that assessed value is the same as estimated market value, this often is not the case. Examples include when interior reconstruction has occurred and the assessor has not seen the improvements, or when houses in the vicinity have not been reassessed for an prolonged period.

Myth: The appraised value of a home will vary depending upon if the appraisal is conducted for the buyer or the seller.

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

Myth: The replacement cost of the home will be is on par with the market value.

Fact: Market value is acquired by what a willing buyer would likely pay a willing seller for a certain house, with neither being under pressure to buy or sell. The dollar amount demanded to rebuild a property is what constitutes the replacement cost.

Myth: There are specific ways that appraisers use to show the cost of a home, like the price per square foot.

Fact: There are many numerous formulae that an appraiser will use to make an in-depth investigation of every factor in consideration of the property, such as the size, location, condition, how close it is to specific facilities and the worth of recently sold comparable houses.

Myth: As properties appreciate by a certain percentage - in a strong economic state - the homes nearby are expected to increase by the same amount.

Fact: All appreciation of worth is on a case-by-case basis, determined by information on relevant considerations and the data of comparable homes. It doesn't matter if the economy is on the rise or declining.

Myth: Just examining what the house looks like on its exterior gives an excellent idea of its worth.

Fact: Home value is determined by a number of factors, including - but not limited to - location, condition, improvements, amenities, and market trends. An external inspection obviously can't provide all of the information needed.

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

Fact: Legally, the report is owned by the lending company unless the lender relinquishes their interest in the appraisal. Under the Equal Credit Opportunity Act, any consumer asking for a copy of the document must be given one by their lender.

Myth: It doesn't matter to consumers what's in the report so long as it satisfies the necessities of their lending company.

Fact: Only if home buyers examine a copy of their appraisal 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. There is a wealth of information stored in an appraisal report that should 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 proximity.