Appraisal myths & facts

By law, an appraiser is required to be state-licensed to offer appraisals for federally-supported purchases. The law allows you to get a copy of your completed report from your lender after it has been provided. Contact our professional staff if you have any questions about the appraisal procedure.

Myth: Market value has to be equivocal to the assessed value of the property.

Fact: This is not often the case; most states do support the concept that the assessed value is the same as market value, but not always. Often when interior remodeling has occurred and the assessor is unaware of the improvement or other homes in the neighborhood have not been reassessed for quite some time, it may vary wildly.

Myth: The buyer or the seller will have impact in the value 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 outcome of the analysis, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is conducted.

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

Fact: Without any suggestion from any external parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a particular home. Replacement value is the dollar amount required to rebuild a property in-kind.

Myth: Specific formulae, such as the price per square foot of the property, are the methods appraisers use to determine the cost of a house.

Fact: There are many differing methods that an appraiser will use to make a detailed analysis of every factor in consideration of the home, such as the size, location, condition, how close it is to specific facilities and the value of recently sold comparable houses.

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

Fact: Any price at which an appraiser concludes in regards to a specific property is always individualized, based on certain factors derived from the data of comparable houses and other considerations within the house itself. It makes no difference whether the economy is excellent or bad.

Myth: You can usually find what a house is worth simply by looking at the exterior.

Fact: To find an accurate value beyond all doubt, an appraiser must examine the property on a variety of factors based on location, condition, improvements, amenities, and market trends. An exterior inspection certainly can't provide all of the data needed.

Myth: Because the consumer is the person who puts up the capital to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.

Fact: Unless a lending agency releases its interest in the appraisal report, it is legally owned by the lending agency that ordered the appraisal. Because of the Equal Credit Opportunity Act, any consumer requesting a copy of the document must be provided with it by their lending agency.

Myth: Consumers need not be concerned with what is in their report so long as it satisfies the needs of their lending company.

Fact: It is a very good idea for home buyers to check over a copy of their report so that they can double-check the accuracy of the report, in case there is a need to question its accuracy. 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 home buyer 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 vicinity.