Common myths about appraising

Legally, an appraiser is required to be state certified to perform substantiated real estate appraisals for federally-supported purchase. Also by law, you have the right to demand a copy of the completed appraisal from your lender. Contact us if you have any questions about the appraisal process.

Myth: Assessed value will always be equal to market value.

Fact: While most states back the suggestion that assessed value is the same as estimated market value, this commonly is not the case. Examples include when interior reconstruction has happened and the assessor does not know about the improvements, or when properties in the vicinity have not been reassessed for an extended time.

Myth: Depending on if the appraisal is drawn up for the buyer or the seller, the value of the home will vary.

Fact: The appraiser has no personal interest in the result of the report and should complete services with independence, objectivity and impartiality - no matter for whom the appraisal is provided.

Myth: Any time market value is found, it should equal the replacement cost of the house.

Fact: The way market value is derived is based on what a home buyer would be willing to pay a willing seller for a house without being under duress from any outside party to buy or sell. Replacement value is the dollar amount required to reconstruct a house in-kind.

Myth: Appraisers use a calculation, like a specific price per square foot, to conclude the worth of a property.

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

Myth: When the economy is on the rise and the value of homes are reported to be appreciating by a certain percentage, the other homes in the area can be expected to appreciate based on that same percentage.

Fact: Cost appreciation of a certain home must be determined on an individualized basis, factoring in data on comparable homes and other relevant elements. It doesn't matter if the economy is on the rise or declining.

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Myth: The home's exterior is determinate of the actual price of the property; there is no need to do an interior inspection.

Fact: Property worth is concluded by a multitude of variables, including - but not limited to - area, condition, improvements, amenities, and market trends. As you can see, none of these factors can be derived simply by inspecting the property from the exterior.

Myth: Since you're the one coughing up the cash for the appraisal when applying for the loan to purchase or refinance real estate, you own the ordered appraisal.

Fact: Legally, the appraisal is owned by the lending agency unless the lender relinquishes their interest in the appraisal. Consumers must be given a copy of the appraisal report upon written request as per the Equal Credit Opportunity Act.

Myth: There's no point for consumers to even worry about what the report contains so long as their lending agency is satisfied.

Fact: It is very important for consumers to go through a copy of their appraisal so that they can double-check the accuracy of the report, in case they need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can double as a record for the future, containing a great deal of information - including, but 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 proximity.

Myth: Appraisals are ordered only to assess real estate property values in home sales involving mortgage-lending deals.

Fact: Ordering an appraisal can fulfill a variety of requirements depending on the designations and certifications of the appraiser involved; appraisers can perform a great deal of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.

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

Fact: A home inspection serves a completely different purpose than an appraisal. The function of an appraisal is to find an opinion of fair market value during the appraisal process and the completion of the report. The point of a home inspector is to find the condition of the home and its main components, then provide a report on their findings.