Appraisal myths debunked

By law, an appraiser must be state-licensed to perform appraisals for federally-supported purchases. The law entitles you to acquire a copy of your finished appraisal report from your lending agency after it has been provided. Contact our professional staff if you have any questions about the appraisal process.

Myth: Assessed value generally will equate to market value.

Fact: While most states back the idea that assessed value is the same as estimated market value, this often is not the case. Examples include when interior remodeling has occurred and the assessor has not seen the improvements, or when properties in the vicinity have not been reassessed for an prolonged time.

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

Fact: The cost of the home does not affect the pay of the appraiser; because of this, the appraiser has no pressured interest in the opinion of value of the home. Obviously, he will complete his job with impartiality and objectivity regardless for whom the appraisal is created.

Myth: Market value will equate to replacement cost.

Fact: The way market value is found is based on what a buyer would likely pay a willing seller for a house without being under influence from any outside group to purchase or sell. If the home were reconstructed, the dollar amount required to do so would set the replacement cost.

Myth: There are certain ways that appraisers use to find the cost of a property, such as the price per square foot.

Fact: There are many different calculations that an appraiser will use to make a detailed analysis of every factor pertaining to the house, such as the size, location, condition, how close it is to undesirable facilities and the value of recently sold comparable houses.

Myth: As homes appreciate by a specific percentage - in a strong economy - the houses within the same neighborhood are expected to increase by the same amount.

Fact: Value appreciation of a specific home is always determined on an individualized basis, factoring in data on comparable houses and other relevant elements. It doesn't matter if the economy is doing well or declining.

Myth: Just looking at what the home looks like on the outside gives an idea of its cost.

Fact: There are a multitude of different factors that determine the value of a house; these factors include area, condition, improvements, amenities, and market trends. As you can see, none of these things can be derived simply by inspecting the house from the exterior.

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

Fact: Unless a lending agency releases its vestment in the document, it is legally owned by the lending agency that purchased the appraisal. However, home buyers must be supplied with a copy of the appraisal report upon written request, through the Equal Credit Opportunity Act.

Myth: Home buyers need not care about what is in their appraisal so long as it exceeds the needs of their lending company.

Fact: A home buyer should definitely read through their document; there may be some questions or some worries about the accuracy of the analysis that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes a valuable record for future reference, filled with useful and often-revealing information - 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.