Appraisal myths & facts

By law, an appraiser must be state-licensed to produce appraisals for federally-related transactions. The law gives you the right to acquire a copy of your completed appraisal from your lending agency after it has been produced. Contact our professional staff if you have any questions about the appraisal procedure.

Myth: Assessed value generally will be equal to market value.

Fact: While most states support the suggestion that assessed value equates estimated market value, this commonly is not the case. Interior remodeling that the assessor is unaware of and a dearth of reassessment on nearby properties are prime examples of why the price can vary.

Myth: Depending on if the appraisal is ordered for the buyer or the seller, the appraised value of the property will vary.

Fact: There is no personal interest on the part of the appraiser in the outcome of the report, therefore he will complete his work with impartiality and independence, no matter for whom the appraisal is written.

Myth: Market value should equal replacement cost.

Fact: Market value is arrived at through what a willing buyer would likely pay a willing seller for a specific home, with neither being under undue influence to buy or sell. If the home were reconstructed, the dollar amount required to do so would form the replacement cost.

Myth: There are specific ways that real estate appraisers use to show the cost of a house, such as the price per square foot.

Fact: There are many varied methods that an appraiser will use to make an in-depth investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to specific facilities and the cost of recently sold comparable properties.

Myth: When the economy is strong and the sales prices of homes are reported to be rising by a certain percentage, the other properties in the proximity can be expected to increase based on that same percentage.

Fact: Cost appreciation of a certain home must be determined on a case-by-case basis, factoring in data on comparable properties and other relevant specifications within the property itself. It makes no difference whether the economy is strong or terrible.

Myth: The house's exterior is determinate of the actual value of the home; it is unnecessary to do an interior appraisal.

Fact: House value is concluded by a multitude of factors, including area, condition, improvements, amenities, and market trends. An outside-only inspection certainly can't provide all of the data necessary.

Myth: Since you're the one funding for the appraisal report when applying for your loan to buy or refinance your home, you own the provided appraisal report.

Fact: Legally, the report is owned by the lender unless the lender releases their interest in the document. Home buyers must be supplied with a version of the report through request due to the Equal Credit Opportunity Act.

Myth: There's no reason for home buyers to even worry about what the appraisal contains so long as their lending institution is fine with the contents therein.

Fact: It is almost imperative for home buyers to read a copy of their appraisal so that they can double-check 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. An appraisal report can serve as a record for the future, containing an exorbitant amount of information - including, but certainly 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.