Common myths about appraising

By law, an appraiser is required to be state-licensed to offer appraisals for federally-related purchases. The law entitles you to acquire a copy of your completed report from your lending agency after it has been provided. Contact Premier Appraisal of SoCal if you have any concerns about the appraisal process.

Myth: The value that is ascertained by the appraiser will be exactly the same as the market value.

Fact: It might be that California, like most states, validates the common myth that the assessed value equals the market value; however, this certainly varies based on state-to-state. Examples include when interior remodeling has occurred and the assessor does not know about the improvements, or when homes in the vicinity have not been reassessed for an extended period.

Myth: The buyer or the seller may have some pull in the cost of the home depending upon for whom the appraiser is working.

Fact: There is no real interest on the part of the appraiser in the outcome of the appraisal, therefore he will conduct his work with impartiality and independence, regardless for whom the appraisal is conducted.

Myth: The replacement value of the house will be is on par with the market value.

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

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

Fact: There are many varied ways that an appraiser will use to make a full analysis 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 homes.

Myth: In a robust economy - when the prices of homes in a given region are reported to be increasing by a particular percentage - the prices of individual houses in the vicinity can be expected to rise by that same percentage.

Fact: Cost increase of a certain property is always concluded on an individualized basis, factoring in information on comparable houses and other relevant elements. It doesn't matter if the economy is doing well or declining.

Myth: Just looking at what the house looks like on its exterior gives an excellent idea of its cost.

Fact: Property value is determined by a multitude of variables, including location, condition, improvements, amenities, and market trends. There's no real way to get all of this information from simply inspecting the property from the outside.

Myth: Considering that the consumer is the one who provides the money to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal is theirs.

Fact: The appraisal report is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the appraisal. However, home buyers must be given a copy of the appraisal report upon written request, through the Equal Credit Opportunity Act.

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

Fact: It is a very good idea for consumers to go through a copy of their appraisal so that they can verify the accuracy of the report, in case they 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, comprised of helpful and often-revealing information - 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.