Common myths about appraising

By law, an appraiser must be state-licensed to produce appraisals for federally-backed transactions. Also by law, you have the right to request a copy of the finished appraisal report from your lending agency. Contact us if you have any concerns about the appraisal procedure.

Myth: Assessed value will always be equal to market value.

Fact: While most states support the concept that assessed value is equal to estimated market value, this generally is not the case. Examples include when interior remodeling has happened and the assessor has not seen the improvements, or when properties in the area have not been reassessed for an prolonged period.

Myth: The buyer or the seller may have an influence in the cost of the house depending upon for whom the appraiser is working.

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

Myth: Any time market value is found, it should be the same as the replacement cost of the property.

Fact: Without any influence from any external parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific property. Replacement value is the dollar amount necessary to rebuild a home in-kind.

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

Fact: There are many varied processes that an appraiser will use to make a detailed investigation of every factor in consideration of the property, such as the size, location, condition, how close it is to certain facilities and the value of recently sold comparable properties.

Myth: As properties increase their worth by a specific percentage - in a strong economic state - the homes in proximity are expected to appreciate by the same amount.

Fact: Any worth at which an appraiser arrives in regards to a certain house is always individualized, based on certain factors found from the data of comparable properties and other considerations within the property itself. It makes no difference whether the economy is strong or on the decline.

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

Fact: To determine an accurate worth beyond all doubt, an appraiser must assess the home on a variety of factors based on location, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from simply looking at the home from the exterior.

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

Fact: Legally, the appraisal is owned by the lending company unless the lender relinquishes their interest in the report. Home buyers have to be given a copy of the report through request due to the Equal Credit Opportunity Act.

Myth: It doesn't concern consumers what's in the appraisal so long as it meets the necessities of their lending company.

Fact: It is very important for home buyers to look at a copy of their appraisal so that they can verify the accuracy of the document, in case they need 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, containing a great deal of data - including, but certainly 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 proximity.