Common myths about appraising

Legally, a real estate appraiser must be state certified to perform legitimate appraisal reports for federally-related purchase. The law allows you to receive a copy of your finished appraisal report from your lending agency after it has been produced. Contact us if you have any concerns about the appraisal process.

Myth: Market value should be equivocal to the assessed value of the property.

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. Examples include when interior reconstruction has occurred and the assessor is unaware of the improvements, or when homes in the vicinity have not been reassessed for an extended period.

Myth: Depending on if the appraisal is provided for the buyer or the seller, the value of the home will vary.

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

Myth: Any time market value is found, it should be the same as the replacement cost of the house.

Fact: The way market value is found is based on what a buyer would be willing to pay a willing seller for a property without being under influence from any outside party to buy or sell. Replacement cost is the dollar amount needed to rebuild a property in-kind.

Myth: Appraisers use a formula, like a certain price per square foot, to figure out the value of a property.

Fact: Appraisers complete a detailed analysis of all factors pertaining to the price of a property, including its location, condition, size, proximity to facilities and recent opinion of value of comparable properties.

Myth: When the economy is on the rise and the sales prices of houses are reported to be increasing by a certain percentage, the other houses in the proximity can be expected to increase based on that same percentage.

Fact: Cost increase of a certain house must be concluded on an individualized basis, factoring in information on comparable properties and other relevant elements. It makes no difference whether the economy is excellent or on the decline.

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

Fact: House value is concluded by a number of factors, including location, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from just examining the property from the exterior.

Myth: Because the consumer is the person who puts up the funding to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal is theirs.

Fact: The document is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the appraisal report. Home buyers must be given a version of the report upon written request because of the Equal Credit Opportunity Act.

Myth: Consumers need not be concerned with what is in their appraisal so long as it satisfies the needs of their lending company.

Fact: A home buyer should definitely look through their report; there might be some questions or some worries with the accuracy of the appraisal that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes an invaluable record for future reference, containing helpful and often-revealing data - including 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.