Common myths about appraising

Legally, an appraiser must be state certified to write legitimate real estate appraisals for federally-supported sales. Also by law, you have the ability to request a copy of the finished appraisal report from your lending agency. Contact our professional staff if you have any questions about the appraisal process.

Myth: Assessed value should always equate to market value.

Fact: This is not often the case; most states do support the suggestion that the assessed value is the same as market value, but not always. There are times when interior remodeling has been done and the assessor is not aware of the improvement or properties in the area have not been reassessed for years or more, it may vary wildly.

Myth: The buyer or the seller will have an influence in the value of the property depending upon for whom the appraiser is working.

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, regardless for whom the appraisal is conducted.

Myth: Any time market value is established, it should be similar to the replacement cost of the house.

Fact: Market value is found by what a willing buyer would be interested in paying a willing seller for a certain home, with neither being under duress to buy or sell. Replacement cost is the dollar amount needed to rebuild a home in-kind.

Myth: Certain formulae, like the price per square foot, are the ways appraisers use to ascertain the worth of a home.

Fact: There are many different calculations that an appraiser will use to make a full investigation of every factor in consideration of the property, such as the size, location, condition, how close it is to specific facilities and the opinion of value of recently sold comparable homes.

Myth: When the economy is robust and the sales prices of houses are reported to be rising by a certain percentage, the other houses in the neighborhood can be expected to appreciate based on that same percentage.

Fact: Any price at which an appraiser arrives concerning a certain house is always individualized, based on certain factors found from the information of comparable homes and other considerations within the home itself. It doesn't matter if the economy is on the rise or declining.

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Myth: Just looking at what the property looks like on the outside gives a good idea of its worth.

Fact: House value is determined by a multitude of factors, including - but not limited to - area, condition, improvements, amenities, and market trends. There's no real way to get all of this information from just inspecting the property from the outside.

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

Fact: The appraisal report is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the appraisal. However, consumers must be provided with a copy of the appraisal upon written 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 company is satisfied.

Fact: A consumer should definitely look through their report; there will probably be some questions or some concerns with the accuracy of the report that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of data contained in an appraisal that can 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 area.

Myth: Appraisals are ordered only to estimate house values in house sales involving mortgage-lending transactions.

Fact: Appraisers can have many varied qualifications and designations which allow them to provide a variety of different services including - but definitely not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.

Myth: An appraisal report is no different than a home inspection.

Fact: An appraisal report does not serve the same purpose as an inspection report. The purpose of the appraiser is to conclude an opinion of value in the appraisal process and through writing the report. The point of a home inspector is to approximate the condition of the property and its main components, then provide a report on these inspection.