Common myths about appraising

By law, an appraiser is required to be state-licensed to offer appraisals for federally-supported sales. Also by law, you are allowed to receive a copy of the finished report from your lending agency. Contact us if you have any concerns about the appraisal process.

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

Fact: This is not often the case; most states do support the suggestion that the assessed value is the same as market value, but not always. Interior remodeling that the assessor has not investigated and a lack of reassessment on nearby houses are excellent examples of why there might be a differential in price.

Myth: Depending on if the appraisal is done for the buyer or the seller, the value of the property will vary.

Fact: The appraiser has no vested interest in the outcome of the appraisal and should render his job with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.

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

Fact: The way market value is derived is based on what a buyer would likely pay a willing seller for a house without being under influence from any outside party to purchase or sell. The dollar amount demanded to rebuild a house is what forms the replacement cost.

Myth: Specific formulae, like the price per square foot, are the methods appraisers use to arrive at the value of a property.

Fact: There are many differing ways that an appraiser will use to make a comprehensive investigation of every factor pertaining to the house, such as the size, location, condition, how close it is to certain facilities and the opinion of value of recently sold comparable properties.

Myth: As homes appreciate by a specific percentage - in a strong economic state - the houses within the same neighborhood are figured to increase by the same amount.

Fact: Any cost at which an appraiser arrives in regards to a particular home is always personalized, based on certain factors derived from the data of comparable properties and other considerations within the house itself. This is true in good 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 inspection.

Fact: Property value is determined by a number of variables, including area, condition, improvements, amenities, and market trends. Obviously, none of these things can be found simply by examining the property from the outside.

Myth: Because consumers fund appraisal reports when applying for loans to buy or refinance their property, they own their appraisal report.

Fact: Legally, the report is owned by the lending agency unless the lender relinquishes their interest in the report. Because of the Equal Credit Opportunity Act, any home buyer requesting a copy of the report must be provided with it by their lending company.

Myth: There's no need for home buyers to even concern themselves with what the appraisal contains so long as their lending company is fine with the contents therein.

Fact: Only if home buyers check out a copy of their appraisal report can they ensure its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes a near perfect record for future reference, comprised of helpful and often-revealing 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.