Appraisal myths & facts

By law, an appraiser must be state-licensed to produce appraisals for federally-related transactions. You are also entitled by law to receive a copy of the completed report from your lending agency. Contact our professional staff if you have any questions about the appraisal procedure.

Myth: Assessed value should be equal to market value.

Fact: This usually isn't true; most states do support the idea that the assessed value is the same as market value, but not always. At times when interior remodeling has occurred and the assessor is unaware of the improvement or properties in the area have not been reassessed for quite some time, it may vary wildly.

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

Fact: There is no real interest on the part of the appraiser in the result of the report, therefore he will conduct his work with impartiality and independence, regardless for whom the appraisal is written.

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

Fact: Without any influence from any outside parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a particular house. If the house were rebuilt, the dollar amount necessary to do so would make up the replacement cost.

Myth: Appraisers use a calculation, such as a certain price per square foot, to figure out the value of a property.

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

Myth: As homes appreciate by a specific percentage - in a strong economy - the homes around the appreciating properties are expected to increase by the same amount.

Fact: Price appreciation of a certain home is always determined on a case-by-case basis, factoring in information on comparable homes and other relevant considerations. This is true in excellent economic times as well as bad.

Myth: The house's exterior is determinate of the actual price of the property; there is no need to do an interior inspection.

Fact: House worth is concluded by a multitude of variables, including location, condition, improvements, amenities, and market trends. There's no real way to get all of this data from simply inspecting the property from the exterior.

Myth: Because consumers fund appraisals when applying for loans to buy or refinance their house, they own their appraisal.

Fact: Legally, the appraisal is owned by the lender unless the lender releases their interest in the report. By the Equal Credit Opportunity Act, any home buyer asking for a copy of the document must be given it by their lending company.

Myth: Home buyers need not care about what is in their appraisal document so long as it exceeds the necessities of their lending institution.

Fact: Only if home buyers read a copy of their appraisal report 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. There is a wealth of data stored 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.