Common myths about appraising

Legally, a real estate appraiser has to be state certified to create legitimate real estate appraisals for federally-supported purchase. Also by law, you have the right to request a copy of the finished report from your lending agency. Contact our professional staff if you have any concerns about the appraisal procedure.

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

Fact: While most states back the suggestion that assessed value approximates estimated market value, this commonly is not the case. Interior reconstruction that the assessor is not aware of and a lack of reassessment on nearby properties are perfect examples of why this occurs.

Myth: The appraised value of a home will change depending upon if the appraisal is ordered for the buyer or the seller.

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

Myth: Any time market value is established, it should equal the replacement cost of the home.

Fact: Market value is found by what a willing buyer would likely pay a willing seller for a particular home, with neither being under undue influence to buy or sell. If the house were reconstructed, the dollar amount needed to do so would make up the replacement cost.

Myth: There are certain methods that real estate appraisers use to find the cost of a home, such as the price per square foot.

Fact: There are many different formulae that an appraiser will use to make an in-depth analysis of every factor pertaining to the house, such as the size, location, condition, how close it is to undesirable facilities and the cost of recently sold comparable homes.

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 area can be expected to increase based on that same percentage.

Fact: All appreciation of value is on an individual basis, determined by information on relevant considerations and the data of comparable houses. It doesn't matter if the economy is on the rise or declining.

Myth: Just seeing what the property looks like on the outside gives an excellent idea of its cost.

Fact: There are a multitude of different variables that determine the value of a home; these factors include location, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from just inspecting the house from the exterior.

Myth: Since you're the one providing the money for the appraisal when applying for the loan to buy or refinance your home, you own the ordered appraisal.

Fact: Unless a lender releases its interest in the report, it is legally owned by the lending agency that purchased the appraisal. Under the Equal Credit Opportunity Act, any consumer asking for a copy of the appraisal report must be given it by their lending company.

Myth: It doesn't concern consumers what's in the appraisal so long as it meets the necessities of their lending company.

Fact: A home buyer should definitely read through their report; there may be some questions or some concerns with the accuracy of the appraisal report that must be addressed. 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, as it contains a great deal of data - 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 area.