Common myths about appraising

By law, an appraiser must be state-licensed to offer appraisals for federally-backed sales. Also by law, you have the ability to demand a copy of the completed appraisal from your lending agency. Contact our professional staff if you have any questions about the appraisal process.

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

Fact: It is possible that , like most states, supports the suggestion that the assessed value equates to the market value; however, this is not always true. Usually when interior remodeling has occurred and the assessor is unaware of the improvement or other homes in the area have not been reassessed for a good length of time, it may vary wildly.

Myth: The buyer or the seller sometimes may have some pull in the cost of the home depending upon for whom the appraiser is working.

Fact: There is no real interest on the part of the appraiser in the result of the appraisal, therefore he will conduct his work with impartiality and independence, regardless for whom the appraisal is written.

Myth: Market value will equal replacement cost.

Fact: Market value is derived from what a willing buyer would be interested in paying a willing seller for a specific home, with neither being under undue influence to buy or sell. The dollar amount needed to reconstruct a property is what constitutes the replacement cost.

Myth: Certain formulae, such as the price per square foot, are what appraisers use to determine the cost of a house.

Fact: Appraisers complete an exhaustive analysis of all factors in consideration to the cost of a property, including its location, condition, size, proximity to facilities and recent opinion of value of comparable properties.

Myth: In a powerful economy - when the costs of homes in a given county are reported to be appreciating by a certain percentage - the worth of individual properties in the vicinity can be expected to rise by that same percentage.

Fact: Cost appreciation of a specific house must be determined on an individualized basis, factoring in information on comparable houses and other relevant specifications within the home itself. It doesn't matter if the economy is on the rise or declining.

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

Fact: There are a multitude of different variables that determine the value of a home; these factors include area, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from just inspecting the property from the exterior.

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

Fact: The document is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the appraisal. Consumers must be given a copy of the report upon written request due to the Equal Credit Opportunity Act.

Myth: Home buyers need not be concerned with what is in their appraisal report so long as it exceeds the requirements of their lending institution.

Fact: A consumer should definitely inspect their document; there will probably be some questions or some concerns with the accuracy of the report that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes a near perfect record for future reference, comprised of useful and often-revealing information - including 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.

Myth: The only reason someone would hire an appraiser is if a house needs its cost estimated in a lender-based sales transaction.

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

Myth: An appraisal is no different than a home inspection report.

Fact: An appraisal report does not fulfill the same purpose as an inspection report. The purpose of an appraisal is to form an opinion of fair market value during the appraisal process and the completion of the appraisal report. The purpose of a home inspector is to assess the condition of the home and its major components, then write a report on their inspection.