Appraisal myths & facts

Legally, an appraiser has to be state certified to create substantiated real estate appraisals for federally-backed transactions. Also by law, you have the ability to request a copy of the finished appraisal report from your lending agency. Contact us if you have any questions about the appraisal procedure.

Myth: Market value will be similar to the assessed value of the property.

Fact: While most states back the concept that assessed value equates estimated market value, this often is not the case. Examples include when interior reconstruction has occurred and the assessor does not know about the improvements, or when homes in the vicinity have not been reassessed for an extended period of time.

Myth: Depending on if the appraisal is done for the buyer or the seller, the appraised value of the property will vary.

Fact: There is no vested interest on the part of the appraiser in the result of the analysis, therefore he will complete his work with impartiality and independence, despite for whom the appraisal is written.

Myth: The replacement cost of the property 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 certain house, with neither being under undue influence to buy or sell. The dollar amount needed to reconstruct a home is what constitutes the replacement cost.

Myth: There are certain ways that real estate appraisers use to determine the value of a home, such as the price per square foot.

Fact: Appraisers complete a comprehensive analysis of all factors in consideration to the price of a house, including its location, condition, size, proximity to facilities and recent opinion of value of comparable homes.

Myth: As homes increase their worth by a certain percentage - in a robust economic state - the houses nearby are figured to appreciate by the same amount.

Fact: All increase of price is on an individual basis, concluded by information on relevant elements and the data of comparable houses. It makes no difference whether the economy is robust or on the decline.

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

Fact: To determine an accurate price beyond all doubt, an appraiser must examine the home on a variety of factors based on area, condition, improvements, amenities, and current market trends. An outside-only inspection certainly can't provide all of the information needed.

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

Fact: Unless a lending agency releases its vestment in the report, it is legally owned by the lending company that purchased the appraisal. By the Equal Credit Opportunity Act, any consumer asking for a copy of the report must be provided with one by their lending company.

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

Fact: A home buyer should definitely read through their report; there might be some questions or some concerns with the accuracy of the report that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of data contained in an appraisal report 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: The only reason someone would hire an appraiser is if a property needs its worth estimated in a lender sales transaction.

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

Myth: You don't need to get an appraisal if you order a home inspection.

Fact: Appraisal reports have almost nothing in common with a home inspection. An appraiser finds an opinion of value in the appraisal process and resulting appraisal report. House inspectors will create a report that will explain the condition of the property and its major components and possible damage.