Appraisal myths & facts

By law, an appraiser is enforced to be state-licensed to produce appraisals for federally-supported transactions. Also by law, you have the ability to request a copy of the finished appraisal from your lender. Contact us if you have any questions about the appraisal process.

Myth: The value that is assessed by the appraiser is required to be exactly the same as 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 has not investigated and a lack of reassessment on nearby properties are prime examples of why this occurs.

Myth: Depending on if the appraisal is drawn up for the buyer or the seller, the appraised value of the home will vary.

Fact: The appraiser has no personal interest in the outcome of the appraisal and should complete services with independence, objectivity and impartiality - no matter for whom the appraisal is provided.

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

Fact: The way market value is derived is based on what a home buyer would likely pay a willing seller for a house without being under influence from any external group to purchase or sell. Replacement cost is the dollar amount required to reconstruct a house in-kind.

Myth: Appraisers use a calculation, such as a specific price per square foot, to come to the worth of a home.

Fact: There are many numerous formulae that an appraiser will use to make a comprehensive investigation of every factor in consideration of the property, such as the size, location, condition, how close it is to specific facilities and the cost of recently sold comparable houses.

Myth: In a robust economy - when the values of houses in a given region are reported to be rising by a certain percentage - the worth of individual houses in the proximity can be expected to increase by that same percentage.

Fact: Any cost at which an appraiser arrives concerning a specific property is always individualized, based on certain factors found from the data of comparable homes and other considerations within the home itself. This is true in good economic times as well as poor.

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Myth: Just looking at what the house looks like on the outside gives an idea of its cost.

Fact: To determine an accurate value beyond all doubt, an appraiser must assess the house on a variety of factors based on area, condition, improvements, amenities, and market trends. An exterior inspection certainly can't provide all of the data needed.

Myth: Since you're the one providing the money for the appraisal report when applying for the loan to buy or refinance real estate, you own the ordered appraisal.

Fact: Unless a lender releases its vestment in the report, it is legally owned by the lending agency that purchased the appraisal. Under the Equal Credit Opportunity Act, any consumer asking for a copy of the document must be given one by their lending company.

Myth: It doesn't matter to consumers what's in the appraisal so long as it satisfies the necessities of their lending agency.

Fact: It is very important for home buyers to go through a copy of their appraisal so that they can double-check the accuracy of the document, in case there is a need to question its veracity. 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, containing useful and often-revealing data - 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 home needs its price estimated in a lender sales transaction.

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

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

Fact: An appraisal does not serve the same purpose as an inspection. The appraiser forms an opinion of value in the appraisal process and resulting appraisal report. The point of a home inspector is to approximate the condition of the house and its main components, then compose a report on their inspection.