Appraisal myths debunked

By law, an appraiser is enforced to be state-licensed to offer appraisals for federally-supported sales. The law gives you the right to get a copy of your finished appraisal report from your lender after it has been provided. Contact us if you have any questions about the appraisal procedure.

Myth: Market value should be similar to the assessed value of the property.

Fact: It could be that Tennessee, like most states, supports the common myth that the assessed value is no different from the market value; however, this is not always true. Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby houses are prime examples of why the price can vary.

Myth: The buyer or the seller can have leverage in the cost of the house depending upon for whom the appraiser is working.

Fact: The appraiser has no personal interest in the outcome of the appraisal report and should conduct his job with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.

Myth: Market value should approximate replacement cost.

Fact: The way market value is arrived at is based on what a home buyer would likely pay a willing seller for a house without being under influence from any external group to purchase or sell. If the house were rebuilt, the dollar amount needed to do so would make up the replacement cost.

Myth: Certain methods, like the price per square foot, are the methods appraisers use to arrive at the worth of a house.

Fact: There are many different formulae that an appraiser will use to make a detailed analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to certain facilities and the worth of recently sold comparable houses.

Myth: When the economy is on the rise and the value of homes are reported to be increasing by a certain percentage, the other houses in the neighborhood can be expected to increase based on that same percentage.

Fact: Any value at which an appraiser arrives in regards to a specific home is always personalized, based on certain factors pulled from the data of comparable properties and other considerations within the property itself. It makes no difference if the economy is good or bad.

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

Fact: To find an accurate worth beyond all doubt, an appraiser must assess the property on a variety of factors based on area, condition, improvements, amenities, and current market trends. Obviously, none of these variables can be found simply by inspecting the property from the exterior.

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

Fact: The report is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the document. Consumers must be supplied with a copy of the report through request as per the Equal Credit Opportunity Act.

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

Fact: It is very important for home buyers to go through a copy of their appraisal report so that they can verify the accuracy of the document, in case they need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of information stored in an appraisal report that should 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 vicinity.