Appraisal myths debunked

By law, an appraiser needs to be state-licensed to perform appraisals for federally-backed purchases. You are also entitled by law to demand a copy of the finished appraisal report from your lender. Contact us if you have any concerns about the appraisal process.

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

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

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

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

Myth: Market value will equate to replacement cost.

Fact: Without any pressure from any outside parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a specific property. The dollar amount demanded to rebuild a home is what constitutes the replacement cost.

Myth: Certain methods, like the price per square foot, are the methods appraisers use to come to the worth of a house.

Fact: There are many differing formulae that an appraiser will use to make an in-depth analysis of every factor pertaining to the house, such as the size, location, condition, how close it is to undesirable facilities and the value of recently sold comparable properties.

Myth: In a robust economy - when the costs of houses in a given area are reported to be appreciating by a certain percentage - the prices of individual houses in the area can be expected to rise by that same percentage.

Fact: Any cost at which an appraiser arrives in regards to a specific house is always individualized, based on certain factors pulled from the data of comparable homes and other specifications within the property itself. This is true in fair economic times as well as poor.

Myth: Just examining what the property looks like on its exterior gives an idea of its cost.

Fact: There are a number of different factors that determine the value of a home; these factors include location, condition, improvements, amenities, and market trends. An exterior inspection obviously can't provide all of the data required.

Myth: Since you're the one coughing up the cash for the appraisal when applying for your loan to buy or refinance your home, you own the provided appraisal report.

Fact: Legally, the document is owned by the lending agency unless the lender relinquishes their interest in the report. However, home buyers must be supplied with a copy of the document upon written request, through the Equal Credit Opportunity Act.

Myth: There's no need for consumers to even care about what the appraisal contains so long as their lender is fine with the contents therein.

Fact: A consumer should definitely read through their appraisal report; there could be some questions or some worries with the accuracy of the appraisal report that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes a valuable record for future reference, comprised of helpful and often-revealing data - including 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.