Appraisal myths & facts

By law, an appraiser is required to be state-licensed to offer appraisals for federally-related purchases. The law entitles you to get a copy of your finished report from your lending agency after it has been provided. Contact us 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 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 properties are exact examples of why there might be a differential in price.

Myth: Depending on whether the appraisal is drawn up for the buyer or the seller, the cost of the property will vary.

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

Myth: The replacement value of the house should be is on par with the market value.

Fact: Without any pressure from any different parties to buy or sell, market value is what a willing buyer would pay a willing seller for a particular home. The dollar amount needed to rebuild a house is what forms the replacement cost.

Myth: There are specific methods that real estate appraisers use to find the opinion of value of a property, like the price per square foot.

Fact: There are many numerous calculations that an appraiser will use to make an in-depth investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to undesirable facilities and the worth of recently sold comparable properties.

Myth: As properties appreciate by a specific percentage - in a strong economy - the homes in proximity are figured to appreciate by the same amount.

Fact: Worth appreciation of a specific property must be concluded on a case-by-case basis, factoring in data on comparable homes and other relevant considerations. It doesn't matter if the economy is doing well or declining.

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

Fact: House value is concluded by a multitude of factors, including - but not limited to - location, condition, improvements, amenities, and market trends. Obviously, none of these variables can be found just by looking at the house from the outside.

Myth: Since you're the one funding for the appraisal when applying for the loan to buy or refinance real estate, you own the provided appraisal report.

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

Myth: There's no reason for consumers to even care about what the report contains so long as their lending institution is fine with the contents therein.

Fact: A home buyer should definitely read through their document; there might be some questions or some worries about 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. An appraisal can serve as a record for the future, since it contains an incredible amount 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 area.