Appraisal myths debunked

Legally, a real estate appraiser is required to be state certified to write legitimate appraisal reports for federally-backed purchase. The law entitles you to get a copy of your finished appraisal report from your lender after it has been provided. Contact us if you have any concerns about the appraisal procedure.

Myth: The value that is assessed by the appraiser must be the same as the market value.

Fact: This usually isn't true; most states do support the suggestion that the assessed value is the same as market value, but not always. Interior remodeling that the assessor has not investigated and a lack of reassessment on nearby houses are perfect examples of why this occurs.

Myth: Depending on whether the appraisal is done for the buyer or the seller, the value of the property will vary.

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

Myth: Market value should approximate replacement cost.

Fact: Without any pressure from any different parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a particular house. If the house were rebuilt, the dollar amount necessary to do so would be the replacement cost.

Myth: Appraisers use a calculation, like a specific price per square foot, to figure out the cost of a property.

Fact: There are many different formulae that an appraiser will use to make a comprehensive investigation of every factor in consideration of the property, such as the size, location, condition, how close it is to certain facilities and the opinion of value of recently sold comparable houses.

Myth: When the economy is doing well and the sales prices of houses are found to be rising by a certain percentage, the other properties in the neighborhood can be expected to appreciate based on that same percentage.

Fact: Worth increase of a certain house has to be concluded on a case-by-case basis, factoring in information on comparable homes and other relevant considerations. It doesn't matter if the economy is on the rise or declining.

Myth: Just seeing what the home looks like on its exterior gives a good idea of its worth.

Fact: To find an accurate value beyond all doubt, an appraiser must assess the home on a variety of factors based on area, condition, improvements, amenities, and market trends. As you can see, none of these factors can be derived just by viewing the home from the exterior.

Myth: Considering that 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, by law the appraisal is theirs.

Fact: Unless a lending agency releases its vestment in the appraisal report, it is legally owned by the lending company that purchased the appraisal. However, consumers have to be given a copy of the document upon written request, due to the Equal Credit Opportunity Act.

Myth: There's no point for consumers to even care about what the report contains so long as their lending company is satisfied.

Fact: It is very important for home buyers to read a copy of their appraisal so that they can double-check the accuracy of the document, in case it's required to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of information stored in an appraisal report that should 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 proximity.