Appraisal myths & facts

By law, an appraiser is enforced to be state-licensed to perform appraisals for federally-related purchases. Also by law, you are entitled to request a copy of the completed appraisal from your lender. Contact our professional staff if you have any questions about the appraisal process.

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

Fact: While most states support the idea that assessed value is equal to estimated market value, this commonly is not the case. Examples include when interior reconstruction has occurred and the assessor has not seen the improvements, or when properties in the vicinity have not been reassessed for an prolonged period.

Myth: The value of a property will differ depending upon whether the appraisal is ordered for the buyer or the seller.

Fact: The appraiser has no personal interest in the result of the appraisal report and should complete services with independence, objectivity and impartiality - no matter for whom the appraisal is written.

Myth: Market value will equal replacement cost.

Fact: Without any influence from any external parties to buy or sell, market value is what a willing buyer would pay a willing seller for a particular home. If the house were rebuilt, the dollar amount required to do so would form the replacement cost.

Myth: Certain formulae, like the price per square foot, are the methods appraisers use to come to the worth of a house.

Fact: Appraisers make a comprehensive analysis of all factors pertaining to the cost of a house, including its location, condition, size, proximity to facilities and recent values of comparable homes.

Myth: As houses increase their worth by a specific percentage - in a robust economy - the houses in proximity are expected to appreciate by the same amount.

Fact: All appreciation of worth is on a case-by-case basis, found by data on relevant considerations and the data of comparable houses. It makes no difference whether the economy is powerful or on the decline.

Myth: Just examining what the property looks like on its exterior gives a good idea of its value.

Fact: House worth is concluded by a number of variables, including - but not limited to - area, condition, improvements, amenities, and market trends. An external inspection certainly can't provide all of the information required.

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

Fact: Legally, the document is owned by the lending company unless the lender relinquishes their interest in the document. By the Equal Credit Opportunity Act, any home buyer demanding a copy of the report must be provided with it by their lender.

Myth: It doesn't mean anything to consumers what's in the appraisal report so long as it meets the needs of their lender.

Fact: A home buyer should definitely inspect their appraisal report; there may be some questions or some worries about the accuracy of the inspection that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes a valuable record for future reference, containing useful 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 vicinity.