Common myths about appraising

By law, an appraiser needs to be state-licensed to perform appraisals for federally-backed purchases. Also by law, you are allowed to demand a copy of the completed report from your lending agency. Contact us if you have any questions about the appraisal process.

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

Fact: While most states back the suggestion that assessed value equates estimated market value, this often is not the case. Interior remodeling that the assessor is not aware of and a lack of reassessment on nearby properties are prime examples of why this occurs.

Myth: Depending on whether the appraisal is produced for the buyer or the seller, the value of the house will vary.

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

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

Fact: The way market value is derived is based on what a home buyer would be willing to pay a willing seller for a house without being under influence from any outside group to purchase or sell. The dollar amount required to reconstruct a home is what constitutes the replacement cost.

Myth: There are specific methods that appraisers use to show the cost of a house, such as the price per square foot.

Fact: Appraisers complete a full analysis of all factors in consideration to the price of a property, including its location, condition, size, proximity to facilities and recent values of comparable homes.

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

Fact: All increase of value is on a case-by-case basis, concluded by information on relevant conditions and the data of comparable properties. It makes no difference whether the economy is excellent or on the decline.

Myth: The property's exterior is determinate of the actual value of the house; it is unnecessary to do an interior inspection.

Fact: There are a number of different factors that conclude the value of a home; these factors include location, condition, improvements, amenities, and market trends. There's no real way to get all of this information from just looking at the home 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 report.

Fact: Legally, the appraisal report is owned by the lending agency unless the lender relinquishes their interest in the report. By the Equal Credit Opportunity Act, any home buyer demanding a copy of the document must be given one by their lending agency.

Myth: There's no need for consumers to even concern themselves with what the report contains so long as their lender is fine with the contents therein.

Fact: It is a very good idea for consumers to look at a copy of their appraisal report so that they can double-check the accuracy of the report, in case they need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can double as a record for the future, since it contains a great deal of information - including, but certainly 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.