Common myths about appraising

Legally, a real estate appraiser has to be state certified to produce substantiated appraisal reports for federally-backed transactions. Also by law, you are entitled to receive a copy of the finished appraisal from your lender. Contact us if you have any concerns about the appraisal process.

Myth: Assessed value should always be equal to market value.

Fact: While most states uphold the concept that assessed value approximates estimated market value, this commonly is not the case. Interior reconstruction that the assessor is not aware of and a lack of reassessment on nearby houses are perfect examples of why there might be a differential in price.

Myth: The buyer or the seller will have some pull in the value of the property depending upon for whom the appraiser is working.

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

Myth: Market value should approximate replacement cost.

Fact: The way market value is found is based on what a buyer would likely pay a willing seller for a house without being under duress from any external party to buy or sell. Replacement value is the dollar amount necessary to rebuild a house in-kind.

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

Fact: An appraisal is an assertion of data concluded from the property's size, location, proximity to undesirable facilities, the condition of the house and the price of recent comparable sales. You can count on Premier Appraisal of SoCal's staff to be professional in assessing this data.

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

Fact: Price appreciation of a certain property is always concluded on a case-by-case basis, factoring in information on comparable homes and other relevant elements. It makes no difference whether the economy is powerful or bad.

Myth: Just looking at what the house looks like on the outside gives a good idea of its value.

Fact: There are a number of different variables that show property value; these factors include area, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from simply examining the house from the outside.

Myth: Since you're the one providing the money for the appraisal report when applying for the loan to purchase or refinance your house, you own the produced appraisal report.

Fact: Legally, the appraisal report is owned by the lending agency unless the lender releases their interest in the appraisal. However, consumers have to be provided with a copy of the appraisal upon written request, through the Equal Credit Opportunity Act.

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

Fact: Only if consumers look over a copy of their appraisal report 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. Also, the report makes a valuable record for future reference, containing useful and often-revealing information - including 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 area.