Common myths about appraising

Legally, an appraiser is required to be state certified to perform substantiated appraisal reports for federally-backed sales. Also by law, you are allowed to request a copy of the finished report from your lender. Contact our professional staff if you have any concerns about the appraisal process.

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

Fact: While most states support the idea that assessed value equates estimated market value, this often is not the case. Interior reconstruction that the assessor is not aware of and a lack of reassessment on nearby homes are exact examples of why the price can vary.

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

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

Myth: Market value should equal replacement cost.

Fact: The way market value is arrived at is based on what a home buyer would be willing to pay a willing seller for a house without being under influence from any external group to buy or sell. The replacement cost is the dollar amount needed to reconstruct a house in-kind.

Myth: There are certain methods that appraisers use to find the opinion of value of a home, such as the price per square foot.

Fact: Appraisers complete an exhaustive analysis of all factors pertaining to the value of a property, including its location, condition, size, proximity to facilities and recent values of comparable properties.

Myth: When the economy is doing well and the cost of homes are reported to be rising by a certain percentage, the other properties in the proximity can be expected to increase based on that same percentage.

Fact: Any worth at which an appraiser concludes concerning a specific property is always personalized, based on certain factors concluded from the information of comparable properties and other considerations within the home itself. This is true in fair economic times as well as poor.

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

Fact: To find an accurate price beyond all doubt, an appraiser must examine the house on a variety of factors based on location, condition, improvements, amenities, and market trends. An external inspection obviously can't provide all of the information required.

Myth: Considering that the consumer is the party who puts up the funding to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.

Fact: Unless a lender releases its interest in the appraisal report, it is legally owned by the lending company that purchased the appraisal. Home buyers must be provided with a version of the report upon written request as per the Equal Credit Opportunity Act.

Myth: Home buyers need not be concerned with what is in their document so long as it exceeds the requirements of their lending agency.

Fact: It is a very good idea for consumers to read a copy of their report so that they can double-check the accuracy of the document, in case it's required to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of information stored in an appraisal report that can be useful to the home buyer 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.