Appraisal myths & facts

By law, an appraiser is required to be state-licensed to produce appraisals for federally-related purchases. You also have the right to receive a copy of the completed appraisal report from your lending agency. Contact us if you have any questions about the appraisal process.

Myth: Assessed value will always be equal to market value.

Fact: While most states support the concept that assessed value equates estimated market value, this usually is not the case. Interior reconstruction that the assessor has not investigated and a lack of reassessment on nearby houses are perfect examples of why this occurs.

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

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

Myth: Market value will equal replacement cost.

Fact: Without any influence from any different parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a specific house. The dollar amount needed to reconstruct a home is what forms the replacement cost.

Myth: Specific methods, like the price per square foot of the property, are the ways appraisers use to determine the price of a house.

Fact: There are many differing calculations that an appraiser will use to make a comprehensive investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to undesirable facilities and the worth of recently sold comparable properties.

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

Fact: Worth increase of a certain house is always concluded on an individualized basis, factoring in information on comparable houses and other relevant specifications within the property itself. It makes no difference whether the economy is strong or terrible.

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Myth: The home's exterior is determinate of the actual worth of the house; there is no need to do an interior appraisal.

Fact: To determine an accurate price beyond all doubt, an appraiser must inspect the home on a variety of factors based on location, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from simply examining the home from the outside.

Myth: Since the consumer is the one who provides the funding 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 vestment in the document, it is legally owned by the lending company that ordered the appraisal. Under the Equal Credit Opportunity Act, any home buyer asking for a copy of the appraisal report must be provided with it by their lending company.

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

Fact: Only if consumers read 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. Also, the appraisal makes a valuable record for future reference, filled with helpful 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.

Myth: There is no reason to hire an appraiser unless you are trying to get an assessment of the cost of a home during a sales transaction involving a lender.

Fact: Appraisers can have many varied qualifications and designations which allow them to perform a multitude of different services including - but definitely not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.

Myth: You don't need to get an appraisal if you get a home inspection.

Fact: An appraisal report does not serve the same purpose as an inspection report. The purpose of the appraiser is to conclude an opinion of value in the appraisal process and through creating the report. The point of a home inspector is to assess the condition of the property and its main components, then write a report on these conclusions.