Common myths about appraising

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

Myth: The value that is assessed by the appraiser should be equivalent to the market value.

Fact: While most states uphold the idea that assessed value is the same as estimated market value, this usually is not the case. Usually when interior remodeling has been done and the assessor is unaware of the improvement or properties in the neighborhood have not been reassessed for a good length of time, it may vary wildly.

Myth: The buyer or the seller can have an influence in the value of the property depending upon for whom the appraiser is working.

Fact: The price of the home does not affect the pay of the appraiser; as such, the appraiser has no preconceived interest in the value of the property. What this means is he will complete his task with impartiality and independence regardless for whom the appraisal is conducted.

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

Fact: Market value is based on what a willing buyer would be interested in paying a willing seller for a particular property, with neither being under duress to buy or sell. If the home were reconstructed, the dollar amount necessary to do so would set the replacement cost.

Myth: Appraisers use a formula, such as a certain price per square foot, to conclude the cost of a home.

Fact: Appraisers make a detailed analysis of all factors in consideration to the price of a home, including its location, condition, size, proximity to facilities and recent opinion of value of comparable properties.

Myth: In a powerful economy - when the values of properties in a given county are found to be appreciating by a certain percentage - the worth of individual properties in the area can be expected to appreciate by that same percentage.

Fact: All increase of value is on a one-on-one basis, found by data on relevant conditions and the data of comparable homes. It makes no difference if the economy is powerful or poor.

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

Fact: To conclude an accurate value beyond all doubt, an appraiser must assess the property on a variety of factors based on area, condition, improvements, amenities, and current market trends. As you can see, none of these things can be derived simply by examining the property from the exterior.

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

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

Myth: There's no need for home buyers to even concern themselves with what the report contains so long as their lending agency is satisfied.

Fact: It is very important for home buyers to look at a copy of their appraisal so that they can verify the accuracy of the report, in case there is a need to question its accuracy. 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 an incredible amount 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 area.