Appraisal myths & facts

Legally, an appraiser is required to be state certified to create substantiated appraisal reports for federally-supported sales. You also have the right to request a copy of the completed appraisal report from your lender. Contact Premier Appraisals, Inc. if you have any questions about the appraisal process.

Myth: The value that is assessed by the appraiser is required to be exactly the same as the market value.

Fact: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. Interior reconstruction that the assessor is unaware of and a dearth of reassessment on nearby houses are perfect examples of why there might be a differential in price.

Myth: The value of a house will vary depending upon whether the appraisal is conducted for the buyer or the seller.

Fact: There is no personal interest on the part of the appraiser in the outcome of the appraisal, therefore he will complete his work with impartiality and independence, regardless for whom the appraisal is conducted.

Myth: Any time market value is found, it should be similar to the replacement cost of the home.

Fact: The way market value is arrived at is based on what a buyer would be willing to pay a willing seller for a home without being under pressure from any external group to purchase or sell. Replacement value is the dollar amount necessary to rebuild a home in-kind.

Myth: Appraisers use a formula, such as a specific price per square foot, to conclude the cost of a house.

Fact: There are many differing calculations that an appraiser will use to make a full analysis of every factor pertaining to the house, such as the size, location, condition, how close it is to undesirable facilities and the sales price of recently sold comparable homes.

Myth: In a strong economy - when the sales prices of houses in a given county are reported to be rising by a particular percentage - the worth of individual houses in the vicinity can be expected to appreciate by that same percentage.

Fact: Cost increase of a specific home has to be determined on an individualized basis, factoring in data on comparable houses and other relevant elements. This is true in excellent economic times as well as poor.

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

Fact: To find an accurate price 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 obviously can't provide all of the information needed.

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

Fact: Legally, the appraisal report is owned by the lending agency unless the lender releases their interest in the appraisal. Consumers have to be provided with a copy of the document through request due to the Equal Credit Opportunity Act.

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

Fact: A home buyer should definitely read through their appraisal report; there may be some questions or some concerns with the accuracy of the inspection that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can double as a record for the future, containing an incredible amount 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 proximity.