Appraisal myths & facts

Legally, an appraiser has to be state certified to perform substantiated real estate appraisals for federally-related transactions. You are also entitled by law to acquire a copy of the completed report from your lending agency. Contact our professional staff if you have any concerns about the appraisal procedure.

Myth: The value that is assessed by the appraiser must be exactly the same as the market value.

Fact: While most states back the concept that assessed value is equal to estimated market value, this generally is not the case. At times when interior remodeling has occurred and the assessor is not aware of the improvement or other houses in the area have not been reassessed for a good length of time, it may vary wildly.

Myth: The appraised value of a house will vary depending upon if the appraisal is conducted for the buyer or the seller.

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

Myth: Market value should equal replacement cost.

Fact: Without any influence from any outside parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a specific house. Replacement value is the dollar amount needed to rebuild a house in-kind.

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

Fact: There are many varied processes that an appraiser will use to make a detailed investigation of every factor in consideration of the house, such as the size, location, condition, how close it is to specific facilities and the cost of recently sold comparable homes.

Myth: As homes increase their worth by a specific percentage - in a robust economic state - the homes within the same neighborhood are figured to appreciate by the same amount.

Fact: Cost appreciation of a certain home is always concluded on an individualized basis, factoring in data on comparable houses and other relevant specifications within the home itself. This is true in strong economic times as well as bad.

Myth: Just seeing what the house looks like on the outside gives an idea of its cost.

Fact: There are a number of different factors that show property value; these factors include location, condition, improvements, amenities, and market trends. An outside-only inspection obviously can't provide all of the information needed.

Myth: Because the consumer is the one who puts up the money to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal belongs to them.

Fact: Legally, the report is owned by the lending company unless the lender relinquishes their interest in the report. Home buyers have to be provided with a copy of the report through request as per the Equal Credit Opportunity Act.

Myth: There's no need for consumers to even care about what the appraisal contains so long as their lending company is satisfied.

Fact: Only if home buyers look at a copy of their report can they verify 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 an invaluable record for future reference, filled with 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 proximity.