Appraisal myths debunked

Legally, a real estate appraiser needs to be state certified to produce legitimate appraisal reports for federally-related transactions. You also have the right to demand a copy of the completed appraisal report from your lender. Contact us if you have any questions about the appraisal procedure.

Myth: Assessed value should be equal to market value.

Fact: While most states back the suggestion that assessed value is equal to estimated market value, this often is not the case. Interior remodeling that the assessor is unaware of and a dearth of reassessment on nearby properties are excellent examples of why this occurs.

Myth: Depending on if the appraisal is drawn up 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 report and should complete services with independence, objectivity and impartiality - no matter for whom the appraisal is written.

Myth: Market value should be the same as replacement cost.

Fact: Market value is acquired by what a willing buyer would likely pay a willing seller for a specific property, with neither being under undue influence to buy or sell. If the home were rebuilt, the dollar amount required to do so would form the replacement cost.

Myth: Certain formulae, like the price per square foot of the property, are the methods appraisers use to ascertain the price of a home.

Fact: Appraisers make a comprehensive analysis of all factors pertaining to the worth of a home, including its location, condition, size, proximity to facilities and recent worth of comparable homes.

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

Fact: All increase of price is on a case-by-case basis, concluded by data on relevant conditions and the data of comparable homes. It doesn't matter if the economy is doing well or declining.

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

Fact: To find an accurate worth beyond all doubt, an appraiser must examine the house on a variety of factors based on location, condition, improvements, amenities, and current market trends. Obviously, none of these variables can be derived simply by examining the property from the outside.

Myth: Since the consumer is the person who puts up the funding to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal is theirs.

Fact: Legally, the appraisal is owned by the lending agency unless the lender relinquishes their interest in the document. Because of the Equal Credit Opportunity Act, any consumer demanding a copy of the document must be provided with it by their lender.

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

Fact: A consumer should definitely look through their document; there will probably be some questions or some concerns with the accuracy of the report that must be addressed. 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 an exorbitant amount of information - 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.