Common myths about appraising

Legally, a real estate appraiser needs to be state certified to create legitimate real estate appraisals for federally-supported transactions. The law gives you the right to get a copy of your finished appraisal from your lending agency after it has been produced. Contact our professional staff if you have any questions about the appraisal process.

Myth: Assessed value should always be equal to 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 remodeling that the assessor has not investigated and a dearth of reassessment on nearby houses are excellent examples of why the price can vary.

Myth: The opinion of value of a house will vary depending upon if the appraisal is produced for the buyer or the seller.

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

Myth: The replacement value of the house is always is on par with the market value.

Fact: The way market value is arrived at is based on what a home buyer would be willing to pay a willing seller for a home without being under influence from any outside group to buy or sell. Replacement cost is the dollar amount needed to reconstruct a property in-kind.

Myth: Specific methods, like the price per square foot, are the methods appraisers use to ascertain the worth of a property.

Fact: Appraisers complete a comprehensive analysis of all factors pertaining to the cost of a house, including its location, condition, size, proximity to facilities and recent costs of comparable houses.

Myth: In a strong economy - when the prices of houses in a given neighborhood are reported to be appreciating by a certain percentage - the worth of individual homes in the proximity can be expected to rise by that same percentage.

Fact: Any value at which an appraiser concludes concerning a certain home is always individualized, based on certain factors found from the data of comparable houses and other considerations within the house itself. It makes no difference whether the economy is strong or poor.

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

Fact: To find an accurate value beyond all doubt, an appraiser must examine the home on a variety of factors based on location, condition, improvements, amenities, and market trends. There's no real way to get all of this data from simply examining the property from the exterior.

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

Fact: Legally, the document is owned by the lender unless the lender relinquishes their interest in the report. Because of the Equal Credit Opportunity Act, any home buyer requesting a copy of the document must be given one by their lending agency.

Myth: There's no point for consumers to even care about what the appraisal contains so long as their lending agency is satisfied.

Fact: Only if consumers examine a copy of their appraisal can they double-check 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 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 proximity.

Myth: The only reason someone would order an appraisal is if a house needs its price assessed in a lender-based sales transaction.

Fact: Depending upon their qualifications and designations, appraisers can and do provide a series of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.

Myth: A property inspection serves the same purpose as an appraisal.

Fact: A home inspection report serves a completely different purpose than an appraisal report. The function of an appraisal is to form an opinion of fair market value during the appraisal process and the completion of the appraisal. A home inspector analyzes the condition of the home and its main components and reports their findings.