Appraisal myths & facts

By law, an appraiser is required to be state-licensed to offer appraisals for federally-backed sales. The law gives you the right to get a copy of your completed appraisal from your lending agency after it has been produced. Contact Elite Appraisal Services if you have any concerns about the appraisal process.

Myth: Assessed value should be equal to market value.

Fact: While most states support the idea that assessed value is equal to estimated market value, this generally is not the case. Examples include when interior remodeling has happened and the assessor has not seen the improvements, or when homes in the vicinity have not been reassessed for an prolonged time.

Myth: The buyer or the seller may have leverage in the value of the house depending upon for whom the appraiser is working.

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

Myth: Market value will be the same as replacement cost.

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

Myth: There are certain ways that appraisers use to determine the cost of a home, like the price per square foot.

Fact: There are many numerous processes that an appraiser will use to make an in-depth 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 properties.

Myth: As homes appreciate by a certain percentage - in a robust economic state - the properties within the same neighborhood are expected to appreciate by the same amount.

Fact: Cost increase of a certain home is always determined on an individualized basis, factoring in data on comparable properties and other relevant considerations. It makes no difference whether the economy is excellent or terrible.

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

Fact: To conclude an accurate worth beyond all doubt, an appraiser must assess the house on a variety of factors based on area, condition, improvements, amenities, and current market trends. There's no possible way to get all of this data from just examining the property from the exterior.

Myth: Since you're the one providing the money for the appraisal when applying for your loan to purchase or refinance your house, you own the produced appraisal.

Fact: Legally, the document is owned by the lending agency unless the lender releases their interest in the document. Because of the Equal Credit Opportunity Act, any consumer asking for a copy of the document must be given it by their lending company.

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

Fact: Only if consumers read a copy of their report can they ensure 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 invaluable record for future reference, containing helpful and often-revealing 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 area.