Appraisal myths debunked

By law, an appraiser is enforced to be state-licensed to offer appraisals for federally-backed purchases. The law entitles you to receive a copy of your finished appraisal report from your lender after it has been produced. Contact our professional staff if you have any concerns about the appraisal procedure.

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

Fact: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. Interior reconstruction that the assessor has not investigated and a lack of reassessment on nearby properties are excellent examples of why there might be a differential in price.

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

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

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

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

Myth: Certain methods, such as the price per square foot, are the ways appraisers use to come to the value of a house.

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

Myth: As houses increase their worth by a specific percentage - in a strong economic state - the homes in proximity are figured to increase by the same amount.

Fact: Any cost at which an appraiser concludes in regards to a specific house is always individualized, based on certain factors concluded from the data of comparable properties and other specifications within the property itself. It doesn't matter if the economy is doing well or declining.

Myth: Just examining what the house looks like on the outside gives an excellent idea of its worth.

Fact: To find an accurate worth beyond all doubt, an appraiser must assess the property on a variety of factors based on location, condition, improvements, amenities, and market trends. An outside-only inspection obviously can't provide all of the information 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, by law the appraisal report belongs to them.

Fact: The document is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the report. By the Equal Credit Opportunity Act, any home buyer requesting a copy of the document must be given it by their lending agency.

Myth: There's no need for consumers to even care about what the appraisal contains so long as their lending company is fine with the contents therein.

Fact: It is almost imperative for home buyers to peruse a copy of their appraisal report so that they can verify 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. There is an incredible amount 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.