Appraisal myths & facts

By law, an appraiser needs to be state-licensed to produce appraisals for federally-backed purchases. Also by law, you are allowed to demand a copy of the finished appraisal from your lending agency. Contact our professional staff if you have any concerns about the appraisal process.

Myth: Assessed value generally will be the same as to market value.

Fact: This usually isn't true; most states do support the suggestion that the assessed value is the same as market value, but not always. Examples include when interior reconstruction has happened and the assessor is unaware of the improvements, or when properties in the area have not been reassessed for an prolonged period.

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

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

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

Fact: Without any influence from any outside parties to buy or sell, market value is what a willing buyer would pay an interested seller for a particular home. Replacement value is the dollar amount needed to rebuild a home in-kind.

Myth: There are specific ways that real estate appraisers use to determine the cost of a house, such as the price per square foot.

Fact: There are many differing processes that an appraiser will use to make an in-depth investigation of every factor pertaining to 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: In a strong economy - when the costs of houses in a given area are reported to be rising by a certain percentage - the values of individual properties in the area can be expected to increase by that same percentage.

Fact: All increase of value is on a case-by-case basis, found by information on relevant conditions and the data of comparable homes. This is true in good economic times as well as poor.

Myth: The home's outside is determinate of the actual value of the property; it is unnecessary to do an interior inspection.

Fact: There are a multitude of different factors that show the value of a home; these factors include location, condition, improvements, amenities, and market trends. Obviously, none of these factors can be found simply by inspecting the house from the outside.

Myth: Because the consumer is the party who puts up the funding to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal report belongs to them.

Fact: Legally, the appraisal is owned by the lending agency unless the lender releases their interest in the appraisal. By the Equal Credit Opportunity Act, any consumer demanding a copy of the document must be provided with one by their lending company.

Myth: Home buyers need not be concerned with what is in their appraisal report so long as it exceeds the necessities of their lending agency.

Fact: It is a very good idea for home buyers to go through a copy of their report so that they can verify the accuracy of the report, in case it's required to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of information 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 vicinity.