Appraisal myths debunked

By law, an appraiser must be state-licensed to produce appraisals for federally-supported purchases. The law gives you the right to get a copy of your finished appraisal from your lending agency after it has been produced. Contact our professional staff if you have any questions about the appraisal procedure.

Myth: Assessed value generally will be similar to to market value.

Fact: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. Examples include when interior remodeling has happened and the assessor does not know about the improvements, or when properties in the vicinity have not been reassessed for an prolonged period of time.

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

Fact: There is no personal interest on the part of the appraiser in the outcome of the appraisal report, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is conducted.

Myth: The replacement cost of the house is always is on par with the market value.

Fact: The way market value is arrived at is based on what a home buyer would be willing to pay a willing seller for a house without being under influence from any external party to purchase or sell. The replacement cost is the dollar amount needed to rebuild a home in-kind.

Myth: Certain methods, such as the price per square foot, are the ways appraisers use to determine the price of a home.

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

Myth: When the economy is doing well and the worth of properties are found to be increasing by a certain percentage, the other homes in the area can be expected to appreciate based on that same percentage.

Fact: Any cost at which an appraiser arrives in regards to a particular property is always individualized, based on certain factors derived from the data of comparable houses and other specifications within the property itself. This is true in strong economic times as well as poor.

Myth: The home's outside is determinate of the actual value of the property; it is unnecessary to do an interior inspection.

Fact: To conclude an accurate price beyond all doubt, an appraiser must inspect the property on a variety of factors based on location, condition, improvements, amenities, and market trends. There's no real way to get all of this information from just viewing the house from the outside.

Myth: Since you're the one paying for the appraisal report when applying for the loan to purchase or refinance your house, you own the provided appraisal report.

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

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

Fact: It is very important for home buyers to go through a copy of their report so that they can verify the accuracy of the document, in case there is a need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes an excellent record for future reference, containing helpful 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 area.