Appraisal myths debunked

Legally, an appraiser must be state certified to write substantiated appraisal reports for federally-supported sales. Also by law, you have the ability to demand a copy of the completed appraisal report from your lender. Contact our professional staff if you have any concerns about the appraisal process.

Myth: Assessed value should always be similar to to market value.

Fact: While most states back the concept that assessed value is equal to estimated market value, this generally is not the case. Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby houses are perfect examples of why there might be a differential in price.

Myth: The value of a house will vary depending upon whether the appraisal is conducted for the buyer or the seller.

Fact: The appraiser has no personal interest in the result of the report and should render his job with independence, objectivity and impartiality - no matter for whom the appraisal is provided.

Myth: The replacement value of the property is always is on par with the market value.

Fact: Market value is based on what a willing buyer would likely pay a willing seller for a particular house, with neither being under pressure to buy or sell. Replacement value is the dollar amount necessary to rebuild a property in-kind.

Myth: There are certain ways that appraisers use to find the cost of a property, like the price per square foot.

Fact: Appraisers complete a comprehensive analysis of all factors in consideration to the price of a home, including its location, condition, size, proximity to facilities and recent costs of comparable properties.

Myth: In a powerful economy - when the sales prices of properties in a given region are found to be appreciating by a certain percentage - the costs of individual homes in the proximity can be expected to rise by that same percentage.

Fact: Any price at which an appraiser concludes concerning a certain house is always personalized, based on certain factors found from the information of comparable properties and other considerations within the home itself. It makes no difference if the economy is robust or poor.

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Myth: You can often find what a home is worth simply by looking at the outside.

Fact: There are a multitude of different factors that show the value of a home; these factors include location, condition, improvements, amenities, and market trends. There's no real way to get all of this information from simply inspecting the house from the outside.

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

Fact: The appraisal report is, in fact, legally owned by the lending agency - unless the lender "relinquishes its interest" in the appraisal. Consumers have to be supplied with a copy of the report through request due to the Equal Credit Opportunity Act.

Myth: Consumers need not worry about what is in their appraisal report so long as it exceeds the necessities of their lending agency.

Fact: It is very important for consumers to read a copy of their appraisal so that they can verify the accuracy of the document, in case it's required to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can double as a record for the future, since it contains a great deal of information - 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.

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

Fact: Appraisers can have many different qualifications and designations which allow them to perform a multitude of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.

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

Fact: A home inspection report serves a completely different purpose than an appraisal. The task of the appraiser is to find an opinion of value in the appraisal process and through creating the report. A home inspector determines the condition of the home and its main components and reports these findings.