Appraisal myths & facts

By law, an appraiser needs to be state-licensed to perform appraisals for federally-supported transactions. You are also entitled by law to acquire a copy of the completed appraisal report from your lender. Contact us if you have any concerns about the appraisal procedure.

Myth: Assessed value should be the same as to market value.

Fact: It could be that , like most states, supports the idea that the assessed value equates to the market value; however, this is not always true. Interior reconstruction that the assessor is not aware of and a lack of reassessment on nearby properties are prime examples of why this occurs.

Myth: Depending on whether the appraisal is written for the buyer or the seller, the cost of the house will vary.

Fact: The appraiser has no vested interest in the outcome of the report and should complete his task with independence, objectivity and impartiality - no matter for whom the appraisal is written.

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

Fact: The way market value is arrived at is based on what a home buyer would be willing to pay a willing seller for a home without being under influence from any outside group to buy or sell. If the property were rebuilt, the dollar amount necessary to do so would be the replacement cost.

Myth: Specific formulae, such as the price per square foot of the property, are the methods appraisers use to determine the value of a house.

Fact: There are many numerous formulae that an appraiser will use to make an in-depth analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to undesirable facilities and the sales price of recently sold comparable houses.

Myth: As homes increase their worth by a specific percentage - in a robust economic state - the properties within the same neighborhood are figured to increase by the same amount.

Fact: All increase of value is on a one-on-one basis, determined by information on relevant elements and the data of comparable properties. This is true in good economic times as well as poor.

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

Fact: To conclude an accurate value beyond all doubt, an appraiser must examine the house on a variety of factors based on area, condition, improvements, amenities, and market trends. An external inspection certainly can't provide all of the data required.

Myth: Since you're the one providing the money for the appraisal when applying for the loan to buy or refinance your home, you own the ordered appraisal.

Fact: Legally, the appraisal is owned by the lending company unless the lender releases their interest in the appraisal. By the Equal Credit Opportunity Act, any consumer demanding a copy of the report must be given it by their lending company.

Myth: There's no need for home buyers to even worry about what the appraisal contains so long as their lending agency is satisfied.

Fact: Only if home buyers read 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. Also, the report makes an excellent record for future reference, containing helpful and often-revealing information - 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 area.