Appraisal myths debunked

Legally, a real estate appraiser needs to be state certified to write legitimate appraisal reports for federally-supported sales. The law entitles you to get a copy of your completed appraisal report from your lender after it has been provided. Contact our professional staff if you have any questions about the appraisal process.

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

Fact: While most states support the concept that assessed value approximates estimated market value, this usually is not the case. Examples include when interior reconstruction has happened and the assessor has not seen the improvements, or when houses in the area have not been reassessed for an prolonged period of time.

Myth: Depending on if the appraisal is provided for the buyer or the seller, the opinion of value of the property will vary.

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

Myth: Market value should equal replacement cost.

Fact: Market value is found by what a willing buyer would likely pay a willing seller for a certain home, with neither being under duress to buy or sell. Replacement cost is the dollar amount necessary to reconstruct a property in-kind.

Myth: Certain methods, like the price per square foot, are what appraisers use to ascertain the value of a home.

Fact: There are many different calculations that an appraiser will use to make an in-depth investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to certain facilities and the cost of recently sold comparable houses.

Myth: As properties increase their worth by a specific percentage - in a strong economy - the properties in proximity are expected to increase by the same amount.

Fact: Any price at which an appraiser arrives concerning a certain property is always individualized, based on certain factors pulled from the data of comparable homes and other considerations within the house itself. It makes no difference whether the economy is excellent or terrible.

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

Fact: To conclude an accurate worth beyond all doubt, an appraiser must examine the house on a variety of factors based on location, condition, improvements, amenities, and current market trends. There's no real way to get all of this data from just looking at the home from the outside.

Myth: Because consumers pay for the appraisal when applying for loans to buy or refinance their property, they own their appraisal.

Fact: Unless a lender releases its vestment in the report, it is legally owned by the lending company that ordered the appraisal. However, home buyers have to be provided with a copy of the document upon written request, under the Equal Credit Opportunity Act.

Myth: Home buyers need not care about what is in their appraisal so long as it satisfies the requirements of their lending company.

Fact: It is almost imperative for consumers to go through a copy of their 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 data stored in an report that could 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.