Common myths about appraising

It is enforced by legal agencies that an appraiser must be state-licensed to offer appraisal reports for federally-related real estate sales in California. Also by law, you have the right to demand a copy of the completed report from your lending agency. Contact our professional staff if you have any concerns about the appraisal process.

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

Fact: While most states back the concept that assessed value is the same as estimated market value, this usually is not the case. Interior remodeling that the assessor is not aware of and a dearth of reassessment on nearby homes are exact examples of why the price can vary.

Myth: The opinion of value of a home will vary depending upon whether the appraisal is conducted for the buyer or the seller.

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

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

Fact: Market value is based on what a willing buyer would likely pay a willing seller for a particular home, with neither being under duress to buy or sell. The dollar amount needed to rebuild a home is what constitutes the replacement cost.

Myth: Specific formulae, such as the price per square foot of the property, are the methods appraisers use to arrive at the value of a property.

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

Myth: As properties increase their worth by a specific percentage - in a robust economy - the properties nearby are figured to increase by the same amount.

Fact: Any value at which an appraiser concludes in regards to a certain home is always personalized, based on certain factors derived from the information of comparable properties and other specifications within the home itself. It makes no difference if the economy is powerful or poor.

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

Fact: Home value is determined by a multitude of factors, including - but not limited to - area, condition, improvements, amenities, and market trends. As you can see, none of these things can be derived just by looking at the property from the exterior.

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

Fact: The appraisal is, in fact, legally owned by the lender - unless the lender "releases its interest" in the document. Under the Equal Credit Opportunity Act, any home buyer demanding a copy of the report must be provided with one by their lender.

Myth: Home buyers need not be concerned with what is in their appraisal so long as it meets the needs of their lending institution.

Fact: Only if consumers check out a copy of their appraisal can they ensure its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can serve as a record for the future, containing an exorbitant amount of 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.