Appraisal myths debunked

By law, an appraiser is enforced to be state-licensed to offer appraisals for federally-backed purchases. Also by law, you have the right to demand a copy of the completed appraisal from your lender. 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 support the concept that assessed value is the same as estimated market value, this commonly is not the case. Often when interior remodeling has occurred and the assessor is not aware of the improvement or other houses in the area have not been reassessed for quite a while, it may vary wildly.

Myth: Depending on whether the appraisal is produced for the buyer or the seller, the appraised value of the property will vary.

Fact: The cost of the home does not affect the payment of the appraiser; as such, the appraiser has no pressured interest in the value of the property. Obviously, he will provide services with impartiality and independence regardless for whom the appraisal is provided.

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

Fact: Without any pressure from any external parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific house. If the property were rebuilt, the dollar amount required to do so would be the replacement cost.

Myth: Specific formulae, like the price per square foot, are what appraisers use to ascertain the cost of a property.

Fact: Appraisers complete an exhaustive analysis of all factors in consideration to the cost of a property, including its location, condition, size, proximity to facilities and recent sale prices of comparable homes.

Myth: As houses increase their worth by a specific percentage - in a robust economic state - the homes in proximity are expected to appreciate by the same amount.

Fact: All increase of price is on a one-on-one basis, found by data on relevant elements and the data of comparable homes. This is true in excellent economic times as well as poor.

Myth: Just examining what the property looks like on the outside gives an idea of its worth.

Fact: To conclude an accurate value beyond all doubt, an appraiser must inspect the home on a variety of factors based on location, condition, improvements, amenities, and current market trends. Obviously, none of these things can be found simply by examining the house from the outside.

Myth: Since the consumer is the person who puts up the funding to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal report is theirs.

Fact: The report is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the appraisal. However, consumers have to be provided with a copy of the report upon written request, because of the Equal Credit Opportunity Act.

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

Fact: It is a very good idea for home buyers to look at a copy of their report so that they can double-check the accuracy of the document, in case there is a need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes a valuable record for future reference, filled with helpful and often-revealing data - including, but 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 vicinity.