Appraisal myths & facts

By law, an appraiser is required to be state-licensed to perform appraisals for federally-supported transactions. The law gives you the right to receive a copy of your completed appraisal from your lender after it has been produced. Contact Elite Appraisal Services if you have any concerns about the appraisal procedure.

Myth: Market value will always be similar to the assessed value of the property.

Fact: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. Examples include when interior reconstruction has happened and the assessor has not seen the improvements, or when houses in the vicinity have not been reassessed for an extended time.

Myth: The buyer or the seller often will have leverage in the cost 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 report, therefore he will conduct his work with impartiality and independence, regardless for whom the appraisal is ordered.

Myth: Market value will equate to replacement cost.

Fact: The way market value is derived is based on what a home buyer would likely pay a willing seller for a house without being under pressure from any outside party to purchase or sell. The dollar amount demanded to rebuild a home is what forms the replacement cost.

Myth: There are certain ways that real estate appraisers use to determine the value of a house, such as the price per square foot.

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

Myth: As homes increase their worth by a certain percentage - in a robust economic state - the houses around the appreciating properties are expected to increase by the same amount.

Fact: All appreciation of worth is on an individual basis, found by information on relevant elements and the data of comparable properties. This is true in excellent economic times as well as poor.

Myth: The house's outside is determinate of the actual price of the home; there is no need to do an interior inspection.

Fact: To determine an accurate price beyond all doubt, an appraiser must assess the home on a variety of factors based on area, condition, improvements, amenities, and current market trends. Obviously, none of these factors can be derived simply by examining the property from the exterior.

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

Fact: The appraisal is, in fact, legally owned by the lending agency - unless the lender "relinquishes its interest" in the appraisal report. Home buyers have to be given a copy of the report upon written request due to the Equal Credit Opportunity Act.

Myth: It doesn't concern consumers what's in the appraisal report so long as it meets the necessities of their lending company.

Fact: Only if home buyers examine a copy of their appraisal 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 appraisal makes an excellent record for future reference, comprised of 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 proximity.