Common myths about appraising

By law, an appraiser needs to be state-licensed to produce appraisals for federally-supported purchases. You have the ability to request a copy of the completed appraisal from your lending agency. Contact our professional staff if you have any concerns about the appraisal procedure.

Myth: Assessed value will always equate to market value.

Fact: While most states uphold the suggestion that assessed value is the same as estimated market value, this generally is not the case. Usually when interior remodeling has been done and the assessor is has not investigated the improvement or other houses in the area have not been reassessed for years or more, it may vary wildly.

Myth: The value of a house will change depending upon whether the appraisal is produced for the buyer or the seller.

Fact: The appraiser has no vested interest in the outcome of the appraisal and should complete services with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.

Myth: Any time market value is established, it should be similar to the replacement cost of the property.

Fact: The way market value is arrived at is based on what a home buyer would likely pay a willing seller for a property without being under influence from any outside party to purchase or sell. The dollar amount necessary to reconstruct a property is what constitutes the replacement cost.

Myth: Appraisers use a formula, like a specific price per square foot, to conclude the worth of a house.

Fact: Appraisers complete an exhaustive analysis of all factors in consideration to the worth of a home, including its location, condition, size, proximity to facilities and recent worth of comparable houses.

Myth: In a powerful economy - when the worth of homes in a given area are found to be appreciating by a certain percentage - the worth of individual homes in the vicinity can be expected to appreciate by that same percentage.

Fact: Any cost at which an appraiser concludes concerning a certain house is always personalized, based on certain factors found from the data of comparable properties and other specifications within the house itself. It makes no difference whether the economy is excellent or on the decline.

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

Fact: To conclude an accurate worth beyond all doubt, an appraiser must inspect the house on a variety of factors based on area, condition, improvements, amenities, and current market trends. As you can see, none of these variables can be derived simply by examining the home from the exterior.

Myth: Because consumers pay for appraisal reports when applying for loans to purchase or refinance real estate, they own their appraisal.

Fact: Unless a lending agency releases its vestment in the document, it is legally owned by the lending company that purchased the appraisal. However, consumers must be given a copy of the appraisal report upon written request, under the Equal Credit Opportunity Act.

Myth: There's no reason for home buyers to even care about what the report contains so long as their lender is satisfied.

Fact: Only if consumers check out a copy of their appraisal can they double-check its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of information stored in an appraisal report that will probably 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 proximity.