Appraisal myths debunked

By law, an appraiser must be state-licensed to offer appraisals for federally-related sales. The law entitles you to get a copy of your finished report from your lending agency after it has been provided. Contact our professional staff if you have any concerns about the appraisal process.

Myth: The value that is ascertained by the appraiser should be the same as the 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. Examples include when interior remodeling has happened and the assessor does not know about the improvements, or when houses in the area have not been reassessed for an extended period.

Myth: The buyer or the seller can have some pull in the cost of the house depending upon for whom the appraiser is working.

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

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

Fact: The way market value is derived is based on what a home buyer would be willing to pay a willing seller for a property without being under pressure from any outside party to purchase or sell. The dollar amount needed to rebuild a property is what constitutes the replacement cost.

Myth: There are specific methods that appraisers use to determine the value of a home, such as the price per square foot.

Fact: Appraisers make a detailed analysis of all factors pertaining to the worth of a property, including its location, condition, size, proximity to facilities and recent opinion of value of comparable homes.

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

Fact: Worth appreciation of a certain property must be determined on an individualized basis, factoring in information on comparable houses and other relevant elements. It doesn't matter if the economy is on the rise or declining.

Myth: Just looking at what the house looks like on the outside gives an excellent idea of its cost.

Fact: To find an accurate price beyond all doubt, an appraiser must assess the property on a variety of factors based on location, condition, improvements, amenities, and market trends. An exterior inspection definitely can't provide all of the data necessary.

Myth: Since you're the one providing the money for the appraisal when applying for the loan to purchase or refinance real estate, you own the produced appraisal report.

Fact: The appraisal report is, in fact, legally owned by the lender - unless the lender "releases its interest" in the appraisal. However, home buyers must be supplied with a copy of the document upon written request, under the Equal Credit Opportunity Act.

Myth: Home buyers need not care about what is in their document so long as it satisfies the needs of their lending group.

Fact: Only if consumers examine a copy of their appraisal report can they double-check 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, containing useful and often-revealing information - 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.