Appraisal myths & facts

Legally, an appraiser must be state certified to perform legitimate appraisal reports for federally-related sales. Also by law, you have the right to request a copy of the finished appraisal report from your lender. Contact us if you have any concerns about the appraisal procedure.

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

Fact: This usually isn't true; most states do support the idea that the assessed value is the same as market value, but not always. Interior reconstruction that the assessor is unaware of and a dearth of reassessment on nearby homes are perfect examples of why the price can vary.

Myth: The buyer or the seller can have leverage in the cost of the house depending upon for whom the appraiser is working.

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

Myth: Market value should be the same as 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 pressure from any outside group to purchase or sell. If the home were reconstructed, the dollar amount necessary to do so would be the replacement cost.

Myth: Certain methods, such as the price per square foot of the property, are the ways appraisers use to determine the worth of a property.

Fact: Appraisers complete a detailed analysis of all factors pertaining to the price of a house, including its location, condition, size, proximity to facilities and recent worth of comparable properties.

Myth: As properties increase their worth by a certain percentage - in a strong economic state - the houses within the same neighborhood are figured to appreciate by the same amount.

Fact: Any price at which an appraiser arrives concerning a particular property is always individualized, based on certain factors pulled from the information of comparable houses and other specifications within the property itself. It makes no difference whether the economy is excellent or bad.

Myth: The house's outside is determinate of the actual price of the home; it is unnecessary to do an interior inspection.

Fact: There are a multitude 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 required.

Myth: Since you're the one paying for the appraisal report when applying for your loan to buy or refinance real estate, you own the provided appraisal report.

Fact: Unless a lending agency releases its interest in the report, it is legally owned by the lending company that ordered the appraisal. However, home buyers must be given a copy of the appraisal upon written request, through the Equal Credit Opportunity Act.

Myth: Consumers need not be concerned with what is in their document so long as it satisfies the needs of their lending group.

Fact: A consumer should definitely read through their report; there could be some questions or some worries about the accuracy of the analysis that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of information stored in an appraisal that could 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 area.