Appraisal myths debunked

Legally, a real estate appraiser must be state certified to perform substantiated real estate appraisals for federally-backed sales. Also by law, you are entitled to receive a copy of the completed report from your lender. Contact us if you have any concerns about the appraisal process.

Myth: Assessed value should be equal to market value.

Fact: This is not often the case; most states do support the suggestion that the assessed value is the same as market value, but not always. Interior remodeling that the assessor is not aware of and a lack of reassessment on nearby houses are excellent examples of why this occurs.

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

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

Myth: Any time market value is found, it should equal the replacement cost of the property.

Fact: Without any suggestion from any external parties to buy or sell, market value is what a willing buyer would pay a willing seller for a particular property. The dollar amount demanded to reconstruct a home is what constitutes the replacement cost.

Myth: There are specific methods that real estate appraisers use to show the opinion of value of a house, like the price per square foot.

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

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

Fact: Any price at which an appraiser arrives concerning a certain home is always personalized, based on certain factors derived from the information of comparable homes and other specifications within the home itself. It doesn't matter if the economy is on the rise or declining.

Myth: You can usually see what a home is worth simply by looking at the exterior.

Fact: There are a number of different variables that determine the value of a house; these factors include location, condition, improvements, amenities, and market trends. Obviously, none of these factors can be derived simply by examining the house from the exterior.

Myth: Because consumers pay for appraisals when applying for loans to purchase or refinance their property, they own their appraisal report.

Fact: The document is, in fact, legally owned by the lending agency - unless the lender "relinquishes its interest" in the document. Due the Equal Credit Opportunity Act, any home buyer asking for a copy of the appraisal report must be provided with one by their lending company.

Myth: Home buyers need not worry about what is in their appraisal so long as it exceeds the needs of their lending group.

Fact: A home buyer should definitely read through their appraisal report; there will probably be some questions or some concerns about the accuracy of the report that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of information stored in an report that could 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 vicinity.