Common myths about appraising

By law, an appraiser must be state-licensed to perform appraisals for federally-related sales. Also by law, you have the right to demand a copy of the finished appraisal from your lending agency. Contact our professional staff if you have any questions about the appraisal procedure.

Myth: Assessed value should equate to market value.

Fact: While most states support the suggestion that assessed value is the same as estimated market value, this usually is not the case. Often when interior remodeling has occurred and the assessor is has not investigated the improvement or other houses in the area have not been reassessed for years or more, it may vary wildly.

Myth: Depending on if the appraisal is provided for the buyer or the seller, the value of the home will vary.

Fact: The price of the home does not affect the pay of the appraiser; as such, the appraiser has no preconceived interest in the cost of the house. Obviously, he will provide business with impartiality and objectivity regardless for whom the appraisal is conducted.

Myth: The replacement value of the property should be is on par with the market value.

Fact: Without any pressure from any different parties to buy or sell, market value is what a willing buyer would pay an interested seller for a particular home. If the home were reconstructed, the dollar amount necessary to do so would set the replacement cost.

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

Fact: Appraisers make a full analysis of all factors pertaining to the value of a home, including its location, condition, size, proximity to facilities and recent values of comparable properties.

Myth: When the economy is on the rise and the sales prices of homes are found to be increasing by a certain percentage, the other homes in the area can be expected to rise based on that same percentage.

Fact: Any value at which an appraiser arrives concerning a particular property is always personalized, based on certain factors concluded from the information of comparable properties and other specifications within the home itself. It doesn't matter if the economy is doing well or declining.

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

Fact: To conclude an accurate price beyond all doubt, an appraiser must inspect the house on a variety of factors based on area, condition, improvements, amenities, and market trends. Obviously, none of these variables can be found just by looking at the home from the outside.

Myth: Because consumers pay for the appraisal when applying for loans to purchase or refinance their house, they legally own their appraisal.

Fact: The appraisal is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the appraisal report. However, home buyers have to be provided with a copy of the report upon written request, under the Equal Credit Opportunity Act.

Myth: Consumers need not care about what is in their appraisal so long as it exceeds the requirements of their lending agency.

Fact: It is a very good idea for consumers to read a copy of their report so that they can verify the accuracy of the report, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of data contained in an report that could be useful to the consumer 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.

Myth: Appraisals are ordered only to estimate real estate property values in property sales involving mortgage-lending deals.

Fact: Ordering an appraisal can fulfill a variety of necessities depending on the designations and certifications of the appraiser involved; appraisers can provide a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.

Myth: An appraisal report is the same as a home inspection.

Fact: Appraisal reports are completely different than a home inspection. The job of the appraiser is to form an opinion of value in the appraisal process and through creating the report. The purpose of a home inspector is to assess the condition of the house and its main components, then compose a report on these findings.