Common myths about appraising

By law, an appraiser is required to be state-licensed to produce appraisals for federally-supported purchases. Also by law, you have the ability to demand a copy of the completed appraisal report from your lender. Contact our professional staff if you have any concerns about the appraisal procedure.

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

Fact: While most states back the concept that assessed value is equal to estimated market value, this generally is not the case. Interior remodeling that the assessor is unaware of and a lack of reassessment on nearby homes are prime examples of why the price can vary.

Myth: The buyer or the seller may have some pull in the cost of the home depending upon for whom the appraiser is working.

Fact: The price of the home does not affect the payment of the appraiser; due to this, the appraiser has no personal interest in the value of the home. This means that he will conduct task with impartiality and objectivity regardless for whom the appraisal is produced.

Myth: Market value should approximate replacement cost.

Fact: Market value is based on what a willing buyer would be interested in paying a willing seller for a particular house, with neither being under pressure to buy or sell. If the home were rebuilt, the dollar amount needed to do so would form the replacement cost.

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

Fact: Appraisers complete a comprehensive analysis of all factors in consideration to the value of a house, including its location, condition, size, proximity to facilities and recent opinion of value of comparable houses.

Myth: When the economy is on the rise and the sales prices of houses are reported to be rising by a certain percentage, the other homes in the vicinity can be expected to rise based on that same percentage.

Fact: Value appreciation of a certain home must be concluded on a case-by-case basis, factoring in data on comparable homes and other relevant considerations. This is true in strong economic times as well as bad.

Myth: The property's exterior is determinate of the actual value of the home; there is no need to do an interior inspection.

Fact: To conclude an accurate worth beyond all doubt, an appraiser must assess the home on a variety of factors based on location, condition, improvements, amenities, and market trends. An exterior inspection certainly can't provide all of the data required.

Myth: Because the consumer is the person who provides the money to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal belongs to them.

Fact: Unless a lender releases its interest in the report, it is legally owned by the lending agency that ordered the appraisal. Consumers must be supplied with a version of the document upon written request due to the Equal Credit Opportunity Act.

Myth: It doesn't concern consumers what's in the appraisal so long as it satisfies the requirements of their lending agency.

Fact: Only if home buyers check out a copy of their appraisal can they ensure its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of data stored in an appraisal report that could be useful to the consumer 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 region.