Common myths about appraising

Legally, a real estate appraiser must be state certified to create substantiated appraisal reports for federally-supported purchase. You also have the right to receive a copy of the finished appraisal report from your lending agency. Contact our professional staff if you have any questions about the appraisal process.

Myth: Assessed value will always equate to 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 reconstruction that the assessor is unaware of and a dearth of reassessment on nearby homes are excellent examples of why this occurs.

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

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

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

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 pressure to buy or sell. The dollar amount needed to reconstruct a property is what shows the replacement cost.

Myth: There are certain methods that real estate appraisers use to show the opinion of value of a property, such as the price per square foot.

Fact: There are many different ways that an appraiser will use to make a detailed analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to undesirable facilities and the sales price of recently sold comparable homes.

Myth: In a powerful economy - when the sales prices of homes in a given county are found to be rising by a certain percentage - the costs of individual properties in the area can be expected to appreciate by that same percentage.

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

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Myth: Just seeing what the property looks like on its exterior gives an excellent idea of its worth.

Fact: To determine an accurate value beyond all doubt, an appraiser must inspect the house on a variety of factors based on area, condition, improvements, amenities, and current market trends. There's no real way to get all of this data from just viewing the property from the exterior.

Myth: Since the consumer is the one who puts up the funding to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal belongs to them.

Fact: Unless a lending agency releases its vestment in the report, it is legally owned by the lending agency that purchased the appraisal. However, home buyers must be supplied with a copy of the report upon written request, through the Equal Credit Opportunity Act.

Myth: It doesn't concern consumers what's in the appraisal so long as it meets the necessities of their lending agency.

Fact: Only if home buyers read a copy of their appraisal can they verify its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes an invaluable record for future reference, filled with helpful and often-revealing data - 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 vicinity.

Myth: Appraisals are ordered only to assess home values in home sales involving mortgage-lending transactions.

Fact: Based upon their qualifications and designations, appraisers can and may perform a series of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.

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

Fact: An appraisal report does not fulfill the same purpose as an inspection. The purpose of an appraisal report is to find an opinion of fair market value during the appraisal process and the completion of the report. House inspectors will create a report that will show the condition of the home and its major components and possible damage.