Appraisal myths debunked

Legally, an appraiser is required to be state certified to write substantiated real estate appraisals for federally-backed transactions. You have the ability to acquire a copy of the finished appraisal report from your lender. Contact us if you have any concerns about the appraisal process.

Myth: Assessed value should always equate to market value.

Fact: While most states back the suggestion that assessed value is equal to estimated market value, this generally is not the case. Often when interior remodeling has been done and the assessor is has not investigated the improvement or other homes in the neighborhood have not been reassessed for quite some time, it may vary wildly.

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

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

Myth: Market value should equate to replacement cost.

Fact: Without any influence from any outside parties to buy or sell, market value is what a willing buyer would pay a willing seller for a particular property. The replacement cost is the dollar amount necessary to rebuild a house in-kind.

Myth: Appraisers use a formula, like a certain price per square foot, to arrive at the worth of a house.

Fact: There are many numerous methods that an appraiser will use to make a detailed investigation of every factor in consideration of the house, such as the size, location, condition, how close it is to certain facilities and the cost of recently sold comparable houses.

Myth: When the economy is doing well and the worth of houses are found to be appreciating by a certain percentage, the other houses in the neighborhood can be expected to increase based on that same percentage.

Fact: Any price at which an appraiser arrives concerning a specific property is always individualized, based on certain factors found from the data of comparable properties and other specifications within the house itself. It makes no difference whether the economy is powerful or on the decline.

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

Fact: There are a number of different variables that conclude the value of a home; these factors include location, condition, improvements, amenities, and market trends. An external inspection obviously can't provide all of the data needed.

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

Fact: Legally, the appraisal report is owned by the lender unless the lender releases their interest in the appraisal. Consumers must be given a version of the document upon written request because of the Equal Credit Opportunity Act.

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

Fact: A home buyer should definitely read through their report; there could be some questions or some concerns with the accuracy of the analysis that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes an excellent record for future reference, filled with helpful and often-revealing data - 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 vicinity.