Appraisal myths debunked

By law, an appraiser needs to be state-licensed to produce appraisals for federally-supported purchases. Also by law, you have the right to request a copy of the finished report from your lending agency. Contact us if you have any questions about the appraisal procedure.

Myth: Assessed value should always be equal to market value.

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. Sometimes when interior remodeling has occurred and the assessor is not aware of the improvement or other houses in the area have not been reassessed for quite a while, it may vary wildly.

Myth: The value of a home will differ depending upon if the appraisal is produced for the buyer or the seller.

Fact: The value of the home does not affect the payment of the appraiser; as such, the appraiser has no preconceived interest in the cost of the house. This means that he will provide business with impartiality and objectivity regardless for whom the appraisal is provided.

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

Fact: Market value is derived from what a willing buyer would likely pay a willing seller for a particular house, with neither being under duress to buy or sell. The dollar amount necessary to rebuild a property is what forms the replacement cost.

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

Fact: Appraisers complete a detailed analysis of all factors pertaining to the value of a house, including its location, condition, size, proximity to facilities and recent worth of comparable houses.

Myth: When the economy is on the rise and the worth of houses are found to be increasing by a certain percentage, the other homes in the area can be expected to appreciate based on that same percentage.

Fact: Value increase of a certain house is always determined on an individualized basis, factoring in information on comparable homes and other relevant elements. It makes no difference if the economy is robust or terrible.

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

Fact: There are a number of different variables that determine property value; these factors include area, condition, improvements, amenities, and market trends. An outside-only inspection definitely can't provide all of the information required.

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

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

Myth: There's no reason for home buyers to even care about what the report contains so long as their lender is satisfied.

Fact: It is almost imperative for consumers to look at a copy of their appraisal report so that they can verify the accuracy of the report, in case they need to question its accuracy. 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 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.