Appraisal Myths Debunked

By law, an appraiser must be state-licensed to offer appraisals for federally-backed transactions. You also have the right to demand a copy of the finished report from your lender. Contact our professional staff if you have any questions about the appraisal procedure.

Myth: The value that is ascertained by the appraiser will be the same as the market value.

Fact: This usually isn't true; most states do support the idea that the assessed value is the same as market value, but not always. Often when interior remodeling has occurred and the assessor is unaware of the improvement or other houses in the neighborhood have not been reassessed for a good length of time, it may vary wildly.

Myth: The value of a house will change depending upon if the appraisal is provided for the buyer or the seller.

Fact: There is no real interest on the part of the appraiser in the outcome of the report, therefore he will complete his work with impartiality and independence, regardless for whom the appraisal is conducted.

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

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

Myth: Specific methods, such as the price per square foot of the property, are what appraisers use to come to the cost of a house.

Fact: Appraisers make an exhaustive analysis of all factors pertaining to the cost of a property, including its location, condition, size, proximity to facilities and recent values of comparable properties.

Myth: In a robust economy - when the worth of properties in a given area are found to be increasing by a particular percentage - the values of individual properties in the proximity can be expected to appreciate by that same percentage.

Fact: Any cost at which an appraiser concludes in regards to a specific property is always personalized, based on certain factors found from the information of comparable houses and other considerations within the property itself. It makes no difference whether the economy is strong or bad.

Myth: You can commonly see what a property is worth simply by looking at the exterior.

Fact: Home value is concluded by a number of factors, including - but not limited to - location, condition, improvements, amenities, and market trends. Obviously, none of these things can be found simply by viewing the property from the exterior.

Myth: Considering that the consumer is the person who puts up the capital to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal belongs to them.

Fact: Legally, the appraisal report is owned by the lending agency unless the lender relinquishes their interest in the document. Consumers must be provided with a version of the document through request as per the Equal Credit Opportunity Act.

Myth: Consumers need not care about what is in their report so long as it meets the requirements of their lending institution.

Fact: Only if consumers check out a copy of their report can they verify its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of information contained in an report that can be useful to the home buyer 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 area.