Common myths about appraising

By law, an appraiser is required to be state-licensed to perform appraisals for federally-supported sales. The law entitles you to receive a copy of your completed appraisal report from your lending agency after it has been provided. Contact us if you have any concerns about the appraisal procedure.

Myth: Market value needs to be similar to the assessed value of the property.

Fact: While most states uphold the concept that assessed value is equal to estimated market value, this commonly is not the case. Examples include when interior remodeling has occurred and the assessor has not seen the improvements, or when properties in the vicinity have not been reassessed for an extended period.

Myth: The value of a house will be different depending upon whether the appraisal is produced for the buyer or the seller.

Fact: The appraiser has no vested interest in the outcome of the appraisal report and should complete his task with independence, objectivity and impartiality - no matter for whom the appraisal is written.

Myth: Any time market value is established, it should equate to the replacement cost of the house.

Fact: Without any pressure from any external parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a particular home. If the house were rebuilt, the dollar amount required to do so would be the replacement cost.

Myth: Appraisers use a calculation, such as a certain price per square foot, to figure out the worth of a home.

Fact: Appraisers complete an exhaustive analysis of all factors in consideration to the price of a home, including its location, condition, size, proximity to facilities and recent sale prices of comparable houses.

Myth: As houses appreciate by a specific percentage - in a strong economic state - the properties in proximity are figured to appreciate by the same amount.

Fact: All increase of value is on a case-by-case basis, determined by information on relevant considerations and the data of comparable properties. This is true in excellent economic times as well as bad.

Myth: The home's exterior is determinate of the actual price of the house; there is no need to do an interior appraisal.

Fact: To determine an accurate worth beyond all doubt, an appraiser must examine the property on a variety of factors based on area, condition, improvements, amenities, and market trends. As you can see, none of these variables can be derived simply by inspecting the house from the outside.

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

Fact: Legally, the appraisal report is owned by the lending agency unless the lender releases their interest in the report. However, consumers have to be given a copy of the document upon written request, because of the Equal Credit Opportunity Act.

Myth: Home buyers need not care about what is in their appraisal so long as it meets the requirements of their lending company.

Fact: A consumer should definitely read through their appraisal report; there may be some questions or some concerns with the accuracy of the analysis that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of information stored in an appraisal that should 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.