Appraisal myths & facts

By law, an appraiser needs to be state-licensed to produce appraisals for federally-related purchases. The law allows you to get a copy of your finished report from your lender after it has been produced. Contact our professional staff if you have any concerns about the appraisal process.

Myth: The value that is assessed by the appraiser is required to 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. Interior remodeling that the assessor is unaware of and a lack of reassessment on nearby houses are perfect examples of why the price can vary.

Myth: The buyer or the seller sometimes may have leverage 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 appraisal report, therefore he will conduct his work with impartiality and independence, regardless for whom the appraisal is written.

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

Fact: Market value is derived from what a willing buyer would be interested in paying a willing seller for a particular home, with neither being under undue influence to buy or sell. If the house were reconstructed, the dollar amount necessary to do so would be the replacement cost.

Myth: Specific methods, such as the price per square foot of the property, are the ways appraisers use to arrive at the cost of a property.

Fact: Appraisers complete a detailed analysis of all factors pertaining to the value of a house, including its location, condition, size, proximity to facilities and recent worth of comparable houses.

Myth: In a powerful economy - when the worth of homes in a given county are reported to be rising by a certain percentage - the values of individual houses in the proximity can be expected to appreciate by that same percentage.

Fact: Price appreciation of a certain home is always concluded on a case-by-case basis, factoring in information on comparable homes and other relevant elements. It makes no difference whether the economy is good or poor.

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

Fact: House worth is concluded by a multitude of variables, including - but not limited to - area, condition, improvements, amenities, and market trends. Obviously, none of these things can be found just by examining the property from the exterior.

Myth: Considering that the consumer is the one who provides the money to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal belongs to them.

Fact: Legally, the appraisal is owned by the lender unless the lender releases their interest in the document. Home buyers must be provided with a version of the report through request because of the Equal Credit Opportunity Act.

Myth: Home buyers need not be concerned with what is in their appraisal so long as it meets the needs of their lending group.

Fact: Only if consumers look at a copy of their report can they double-check its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can serve 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 vicinity.