Common myths about appraising

Legally, an appraiser has to be state certified to produce legitimate appraisal reports for federally-supported purchase. Also by law, you are allowed to demand a copy of the completed report from your lending agency. Contact us if you have any concerns about the appraisal process.

Myth: The value that is assessed by the appraiser will be equivalent to the market value.

Fact: This is not often the case; most states do support the concept 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 excellent examples of why there might be a differential in price.

Myth: The buyer or the seller can have impact in the value of the home depending upon for whom the appraiser is working.

Fact: There is no real interest on the part of the appraiser in the outcome of the analysis, therefore he will complete his work with impartiality and independence, despite for whom the appraisal is written.

Myth: Market value should approximate replacement cost.

Fact: Without any pressure from any external parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific home. The dollar amount demanded to rebuild a house is what shows the replacement cost.

Myth: Certain formulae, like the price per square foot, are what appraisers use to arrive at the price of a home.

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

Myth: In a powerful economy - when the costs of houses in a given area are found to be increasing by a certain percentage - the values of individual houses in the proximity can be expected to increase by that same percentage.

Fact: Any worth at which an appraiser concludes in regards to a certain home is always individualized, based on certain factors found from the data of comparable houses and other considerations within the property itself. It makes no difference if the economy is excellent or terrible.

Myth: You can commonly see what a house is worth simply by looking at the outside.

Fact: To conclude an accurate price beyond all doubt, an appraiser must inspect the house on a variety of factors based on area, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from simply viewing the property from the exterior.

Myth: Since you're the one providing the money for the appraisal when applying for your loan to purchase or refinance your home, you own the produced appraisal.

Fact: Legally, the appraisal report is owned by the lending agency unless the lender relinquishes their interest in the report. However, consumers must be given a copy of the report upon written request, due to the Equal Credit Opportunity Act.

Myth: There's no reason for home buyers to even care about what the appraisal contains so long as their lending agency is fine with the contents therein.

Fact: A home buyer should definitely read through their document; there may be some questions or some worries about the accuracy of the appraisal report that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes a valuable record for future reference, filled with useful and often-revealing information - including 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.