Common myths about appraising

By law, an appraiser is enforced to be state-licensed to produce appraisals for federally-backed sales. Also by law, you are entitled to request a copy of the finished appraisal report from your lending agency. Contact Astute Appraisals, Inc. if you have any concerns about the appraisal procedure.

Myth: Market value has to be similar to the assessed value of the property.

Fact: It might be that Maryland, like most states, supports the idea that the assessed value equals the market value; however, this certainly varies based on state-to-state. Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby houses are perfect examples of why there might be a differential in price.

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

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

Myth: Market value will equate to replacement cost.

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 particular property. The dollar amount necessary to reconstruct a property is what forms the replacement cost.

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

Fact: Appraisers complete a comprehensive analysis of all factors pertaining to the cost of a house, including its location, condition, size, proximity to facilities and recent sale prices of comparable homes.

Myth: When the economy is robust and the worth of properties are reported to be appreciating by a certain percentage, the other homes in the area can be expected to appreciate based on that same percentage.

Fact: All appreciation of price is on a case-by-case basis, determined by information on relevant conditions and the data of comparable homes. This is true in fair economic times as well as poor.

Myth: The home's exterior is determinate of the actual price of the property; it is unnecessary to do an interior appraisal.

Fact: To find an accurate value beyond all doubt, an appraiser must inspect the home on a variety of factors based on area, condition, improvements, amenities, and current market trends. An external inspection definitely can't provide all of the data required.

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

Fact: Unless a lending agency releases its vestment in the report, it is legally owned by the lending company that ordered the appraisal. Home buyers have to be given a version of the report upon written request due to the Equal Credit Opportunity Act.

Myth: There's no need for consumers to even concern themselves with what the report contains so long as their lending company is satisfied.

Fact: It is almost imperative for consumers to go through a copy of their report so that they can double-check the accuracy of the report, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes a near perfect record for future reference, filled with useful 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.