Common myths about appraising

By law, an appraiser is enforced to be state-licensed to perform appraisals for federally-supported transactions. The law gives you the right to get a copy of your completed appraisal report from your lending agency after it has been provided. Contact our professional staff if you have any concerns about the appraisal process.

Myth: Market value should be the same as the assessed value of the property.

Fact: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always. At times when interior remodeling has been done and the assessor is has not investigated the improvement or other homes in the neighborhood have not been reassessed for years or more, it may vary wildly.

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

Fact: The opinion of value of the home does not affect the payment of the appraiser; due to this, the appraiser has no vested interest in the cost of the home. What this means is he will conduct business with impartiality and objectivity regardless for whom the appraisal is produced.

Myth: The replacement cost of the house should be 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 property without being under duress from any outside party to buy or sell. If the home were reconstructed, the dollar amount required to do so would set the replacement cost.

Myth: Appraisers use a formula, such as a certain price per square foot, to come to the value of a property.

Fact: There are many differing ways that an appraiser will use to make an in-depth analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to certain facilities and the cost of recently sold comparable homes.

Myth: When the economy is doing well and the value of houses are reported to be appreciating by a certain percentage, the other homes in the vicinity can be expected to increase based on that same percentage.

Fact: Any cost at which an appraiser arrives in regards to a particular house is always individualized, based on certain factors found from the information of comparable homes and other specifications within the home itself. It makes no difference whether the economy is powerful or terrible.

Myth: Just seeing what the home looks like on the outside gives an idea of its value.

Fact: To find an accurate value beyond all doubt, an appraiser must assess the home on a variety of factors based on area, condition, improvements, amenities, and current market trends. An outside-only inspection definitely can't provide all of the information needed.

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

Fact: Unless a lending agency releases its interest in the appraisal report, it is legally owned by the lending agency that ordered the appraisal. However, home buyers have to be supplied with a copy of the appraisal report upon written request, due to the Equal Credit Opportunity Act.

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

Fact: A consumer should definitely read through their document; there will probably be some questions or some concerns about the accuracy of the appraisal that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can double as a record for the future, containing an exorbitant amount of 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 vicinity.