Appraisal myths & facts

By law, an appraiser needs to be state-licensed to offer appraisals for federally-backed sales. The law gives you the right to receive a copy of your finished appraisal from your lending agency after it has been provided. Contact our professional staff if you have any concerns about the appraisal procedure.

Myth: Assessed value should be the same as to market value.

Fact: While most states uphold the idea that assessed value is equal to estimated market value, this usually is not the case. Interior remodeling that the assessor has not investigated and a dearth of reassessment on nearby houses are perfect examples of why this occurs.

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

Fact: The appraised value of the property does not affect the payment of the appraiser; as a result, the appraiser has no vested interest in the opinion of value of the house. Obviously, he will render services with impartiality and independence regardless for whom the appraisal is provided.

Myth: Any time market value is found, it should equal the replacement cost of the house.

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

Myth: Certain methods, such as the price per square foot, are the ways appraisers use to ascertain the value of a house.

Fact: There are many numerous methods that an appraiser will use to make a full analysis of every factor in consideration of the home, such as the size, location, condition, how close it is to specific facilities and the sales price of recently sold comparable properties.

Myth: When the economy is robust and the sales prices of homes are reported to be appreciating by a certain percentage, the other houses in the area can be expected to increase based on that same percentage.

Fact: All increase of price is on a one-on-one basis, determined by information on relevant elements and the data of comparable properties. It doesn't matter if the economy is doing well or declining.

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

Fact: Property worth is concluded by a multitude of factors, including location, condition, improvements, amenities, and market trends. As you can see, none of these factors can be derived simply by looking at the home from the outside.

Myth: Since you're the one paying for the appraisal when applying for the loan to purchase or refinance real estate, you own the produced appraisal.

Fact: Legally, the document is owned by the lending company unless the lender relinquishes their interest in the appraisal. Consumers have to be supplied with a copy of the appraisal report upon written request because of the Equal Credit Opportunity Act.

Myth: Home buyers need not care about what is in their document so long as it satisfies the needs of their lending company.

Fact: It is almost imperative for home buyers to read a copy of their appraisal so that they can verify the accuracy of the report, in case it's required to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of data contained in an appraisal 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 region.

Myth: Appraisals are ordered only to estimate real estate property values in home sales involving mortgage-lending deals.

Fact: Ordering an appraisal can fulfill a variety of wants depending on the designations and certifications of the appraiser involved; appraisers can perform a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.

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

Fact: Appraisal reports have almost nothing in common with a home inspection. An appraiser forms an opinion of value in the appraisal process and resulting report. The job of a home inspector is to assess the condition of the property and its major components, then write a report on these findings.