Appraisal myths & facts

Legally, an appraiser needs to be state certified to create substantiated real estate appraisals for federally-supported sales. You also have the right to request a copy of the completed report from your lender. Contact us if you have any questions about the appraisal procedure.

Myth: Assessed value should always be equal to market value.

Fact: While most states back the suggestion that assessed value approximates estimated market value, this usually is not the case. Interior remodeling that the assessor is unaware of and a dearth of reassessment on nearby homes are excellent examples of why the price can vary.

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 personal interest on the part of the appraiser in the result of the analysis, therefore he will complete his work with impartiality and independence, regardless for whom the appraisal is conducted.

Myth: Market value should approximate replacement cost.

Fact: Market value is based on what a willing buyer would likely pay a willing seller for a particular house, with neither being under undue influence to buy or sell. If the property were reconstructed, the dollar amount needed to do so would make up the replacement cost.

Myth: There are specific ways that real estate appraisers use to find the cost of a house, such as the price per square foot.

Fact: There are many differing formulae 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 undesirable facilities and the value of recently sold comparable houses.

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

Fact: All increase of worth is on a one-on-one basis, determined by information on relevant considerations and the data of comparable properties. It doesn't matter if the economy is doing well or declining.

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

Fact: To conclude an accurate price beyond all doubt, an appraiser must examine the house on a variety of factors based on area, condition, improvements, amenities, and market trends. As you can see, none of these things can be derived just by viewing the home from the outside.

Myth: Since you're the one funding for the appraisal when applying for your loan to buy or refinance your house, you own the ordered appraisal report.

Fact: The document is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the appraisal. Due the Equal Credit Opportunity Act, any consumer requesting a copy of the appraisal report must be provided with it by their lender.

Myth: Consumers need not worry about what is in their appraisal document so long as it exceeds the necessities of their lending group.

Fact: Only if home buyers 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. There is a wealth of information stored in an appraisal report that can 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 region.

Myth: The only reason someone would order an appraisal is if a property needs its worth estimated in a lender sales transaction.

Fact: Depending upon their qualifications and designations, appraisers can and may provide a variety of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.

Myth: A property inspection serves the same purpose as an appraisal.

Fact: An appraisal does not serve the same purpose as an inspection report. The job of the appraiser is to come to an opinion of value in the appraisal process and through writing the report. House inspectors will compose a report that will show the condition of the home and its major components and possible damage.