Appraisal myths & facts

Legally, a real estate appraiser is required to be state certified to produce legitimate real estate appraisals for federally-related transactions. The law gives you the right to receive a copy of your completed appraisal report from your lender after it has been provided. Contact us if you have any questions about the appraisal procedure.

Myth: Market value must be the same as the assessed value of the property.

Fact: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. Interior reconstruction that the assessor has not investigated and a lack of reassessment on nearby properties are perfect examples of why there might be a differential in price.

Myth: The value of a property will be different depending upon if the appraisal is conducted for the buyer or the seller.

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

Myth: Market value should equate to replacement cost.

Fact: The way market value is found is based on what a home buyer would likely pay a willing seller for a property without being under pressure from any outside group to buy or sell. If the house were reconstructed, the dollar amount necessary to do so would be the replacement cost.

Myth: Certain methods, such as the price per square foot of the property, are what appraisers use to ascertain the value of a house.

Fact: Appraisers complete a detailed analysis of all factors in consideration to the cost of a property, including its location, condition, size, proximity to facilities and recent costs of comparable houses.

Myth: In a strong economy - when the values of homes in a given region are reported to be appreciating by a certain percentage - the worth of individual homes in the proximity can be expected to rise by that same percentage.

Fact: Any cost at which an appraiser arrives in regards to a specific property is always personalized, based on certain factors derived from the information of comparable houses and other specifications within the house itself. It doesn't matter if the economy is on the rise or declining.

Myth: Just seeing what the house looks like on the outside gives an idea of its value.

Fact: House value is concluded by a number of factors, including area, condition, improvements, amenities, and market trends. There's no real way to get all of this information from simply viewing the home from the exterior.

Myth: Because 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, legally the appraisal report belongs to them.

Fact: The appraisal report is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the document. Due the Equal Credit Opportunity Act, any home buyer asking for a copy of the report must be given one by their lending agency.

Myth: It doesn't mean anything to consumers what's in the appraisal report so long as it meets the requirements of their lending company.

Fact: Only if home buyers look through a copy of their report can they ensure 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 a valuable record for future reference, filled with useful and often-revealing data - including 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.