Appraisal myths & facts

Legally, a real estate appraiser must be state certified to produce legitimate appraisal reports for federally-supported transactions. Also by law, you are entitled to request a copy of the completed appraisal from your lender. Contact our professional staff if you have any concerns about the appraisal process.

Myth: Assessed value generally will be similar to to market value.

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

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

Fact: There is no personal interest on the part of the appraiser in the result of the analysis, therefore he will conduct his work with impartiality and independence, regardless for whom the appraisal is created.

Myth: Any time market value is established, it should be the same as the replacement cost of the house.

Fact: Without any influence from any different parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a specific property. If the home were reconstructed, the dollar amount needed to do so would be the replacement cost.

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

Fact: There are many numerous ways that an appraiser will use to make a detailed analysis of every factor pertaining to the home, such as the size, location, condition, how close it is to specific facilities and the opinion of value of recently sold comparable homes.

Myth: In a strong economy - when the prices of houses in a given neighborhood are found to be appreciating by a certain percentage - the costs of individual homes in the area can be expected to increase by that same percentage.

Fact: Value appreciation of a specific home must be determined on a case-by-case basis, factoring in data on comparable homes and other relevant elements. It doesn't matter if the economy is doing well or declining.

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

Fact: There are a number of different factors that show property value; these factors include area, condition, improvements, amenities, and market trends. There's no real way to get all of this information from simply inspecting the property from the exterior.

Myth: Because consumers pay for appraisals when applying for loans to buy or refinance their property, they own their appraisal report.

Fact: The report is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the document. Under the Equal Credit Opportunity Act, any consumer asking for a copy of the report must be given one by their lending company.

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

Fact: A consumer should definitely read through their appraisal report; there might be some questions or some worries with the accuracy of the appraisal that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes a near perfect record for future reference, comprised of helpful and often-revealing information - including, but not limited to, 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 vicinity.