Appraisal myths debunked

By law, an appraiser is enforced to be state-licensed to produce appraisals for federally-supported transactions. Also by law, you have the ability to demand a copy of the finished appraisal report from your lending agency. Contact us if you have any concerns about the appraisal process.

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

Fact: While most states uphold the idea that assessed value is equal to estimated market value, this often is not the case. Examples include when interior remodeling has occurred and the assessor has not seen the improvements, or when homes in the area have not been reassessed for an prolonged time.

Myth: The opinion of value of a home will differ depending upon whether 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 analysis, therefore he will conduct his work with impartiality and independence, despite for whom the appraisal is ordered.

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

Fact: Without any influence from any external parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a particular home. If the house were rebuilt, the dollar amount necessary to do so would set the replacement cost.

Myth: Certain formulae, like the price per square foot, are what appraisers use to ascertain the value of a property.

Fact: Appraisers complete a comprehensive analysis of all factors in consideration to the worth of a property, including its location, condition, size, proximity to facilities and recent sale prices of comparable houses.

Myth: In a strong economy - when the prices of properties in a given region are found to be increasing by a particular percentage - the costs of individual houses in the area can be expected to increase by that same percentage.

Fact: All appreciation of worth is on a case-by-case basis, determined by information on relevant conditions and the data of comparable homes. It makes no difference whether the economy is powerful or poor.

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

Fact: To determine an accurate worth beyond all doubt, an appraiser must assess the home 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 consumers fund appraisals when applying for loans to buy or refinance their house, they legally own their appraisal report.

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

Myth: It doesn't mean anything to consumers what's in the appraisal so long as it meets the needs of their lender.

Fact: Only if consumers check out a copy of their appraisal 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 great deal of data contained in an appraisal report that should be useful to the consumer 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.