Appraisal myths & facts

Legally, a real estate appraiser needs to be state certified to perform substantiated appraisal reports for federally-supported purchase. Also by law, you are allowed to receive a copy of the completed appraisal from your lender. Contact Shamrock Appraisals, Inc. if you have any concerns about the appraisal procedure.

Myth: The value that is ascertained by the appraiser should be exactly the same as the market value.

Fact: While most states uphold the suggestion that assessed value is equal to estimated market value, this often is not the case. There are times when interior remodeling has occurred and the assessor is has not investigated the improvement or other houses in the area have not been reassessed for quite a while, it may vary wildly.

Myth: The buyer or the seller will have leverage in the cost of the house depending upon for whom the appraiser is working.

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

Myth: Market value should equal replacement cost.

Fact: Market value is acquired by what a willing buyer would be interested in paying a willing seller for a certain house, with neither being under duress to buy or sell. Replacement cost is the dollar amount needed to rebuild a home in-kind.

Myth: There are specific ways that real estate appraisers use to show the cost of a home, such as the price per square foot.

Fact: There are many different formulae that an appraiser will use to make a detailed investigation of every factor pertaining to the property, such as the size, location, condition, how close it is to certain facilities and the worth of recently sold comparable properties.

Myth: In a powerful economy - when the prices of homes in a given area are found to be increasing by a certain percentage - the worth of individual houses in the vicinity can be expected to increase by that same percentage.

Fact: Value increase of a certain home has to be concluded on an individualized basis, factoring in information on comparable properties and other relevant specifications within the house itself. It doesn't matter if the economy is on the rise or declining.

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

Fact: To determine an accurate value beyond all doubt, an appraiser must assess the house on a variety of factors based on location, condition, improvements, amenities, and current market trends. An outside-only inspection obviously can't provide all of the data needed.

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

Fact: Legally, the report is owned by the lending company unless the lender releases their interest in the appraisal. Due the Equal Credit Opportunity Act, any consumer demanding a copy of the appraisal report must be provided with it by their lender.

Myth: Home buyers need not be concerned with what is in their appraisal report so long as it meets the necessities of their lending company.

Fact: Only if consumers look through a copy of their appraisal can they double-check its accuracy and possibly need to question the result. 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 report that should be useful to the consumer 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 proximity.