Appraisal myths & facts

Legally, a real estate appraiser needs to be state certified to write substantiated real estate appraisals for federally-backed sales. The law entitles you to get a copy of your finished appraisal report from your lender after it has been provided. Contact our professional staff if you have any questions about the appraisal procedure.

Myth: The value that is ascertained by the appraiser must be equivalent to the market value.

Fact: This usually isn't true; most states do support the suggestion that the assessed value is the same as market value, but not always. Interior remodeling that the assessor is not aware of and a dearth of reassessment on nearby houses are exact examples of why there might be a differential in price.

Myth: The appraised value of a property will differ depending upon if the appraisal is ordered for the buyer or the seller.

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

Myth: Market value will equal replacement cost.

Fact: Market value is acquired by what a willing buyer would be interested in paying a willing seller for a specific home, with neither being under duress to buy or sell. The dollar amount required to rebuild a property is what forms the replacement cost.

Myth: Appraisers use a calculation, like a certain price per square foot, to arrive at the value of a property.

Fact: Appraisers make a full analysis of all factors in consideration to the price of a property, including its location, condition, size, proximity to facilities and recent values of comparable homes.

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

Fact: All appreciation of price is on an individual basis, determined by data on relevant elements and the data of comparable properties. It doesn't matter if the economy is doing well or declining.

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

Fact: Property worth is concluded by a number of variables, including area, condition, improvements, amenities, and market trends. Obviously, none of these variables can be derived just by examining the home from the outside.

Myth: Considering that the consumer is the person who provides the capital to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal belongs to them.

Fact: Legally, the document is owned by the lender unless the lender relinquishes their interest in the appraisal. However, home buyers have to be supplied with a copy of the appraisal upon written request, due to the Equal Credit Opportunity Act.

Myth: Consumers need not be concerned with what is in their document so long as it meets the requirements of their lending agency.

Fact: It is a very good idea for home buyers to go through a copy of their report so that they can verify the accuracy of the report, in case it's required to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of data contained in an appraisal that will probably be useful to the home buyer in the future, such as 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.

Myth: There is no reason to order an appraisal unless you are trying to get an assessment of the worth of a property during a sales transaction involving a lending agency.

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

Myth: A property inspection serves the same purpose as an appraisal.

Fact: Appraisal reports are completely different than a home inspection. The job of the appraiser is to form an opinion of value in the appraisal process and through producing the report. A home inspector assesses the condition of the building and its major components and reports their findings.