Common myths about appraising

By law, an appraiser needs to be state-licensed to produce appraisals for federally-related purchases. You are also entitled by law to receive a copy of the finished appraisal report from your lending agency.

Myth: Market value should be equivocal to the assessed value of the property.

Fact: While most states back the idea that assessed value approximates estimated market value, this commonly is not the case. Examples include when interior remodeling has happened and the assessor has not seen the improvements, or when homes in the vicinity have not been reassessed for an extended period of time.

Myth: The appraised value of a home will vary depending upon whether the appraisal is conducted 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 complete his work with impartiality and independence, no matter for whom the appraisal is ordered.

Myth: Market value should approximate replacement cost.

Fact: Without any pressure from any different parties to buy or sell, market value is what a willing buyer would pay a willing seller for a particular house. Replacement value is the dollar amount required to rebuild a home in-kind.

Myth: Appraisers use a formula, such as a specific price per square foot, to arrive at the cost of a property.

Fact: There are many varied processes that an appraiser will use to make an in-depth investigation of every factor in consideration of the home, such as the size, location, condition, how close it is to specific facilities and the worth of recently sold comparable houses.

Myth: In a powerful economy - when the costs of homes in a given area are found to be rising by a certain percentage - the values of individual homes in the proximity can be expected to appreciate by that same percentage.

Fact: Any cost at which an appraiser arrives concerning a particular house is always individualized, based on certain factors derived from the information of comparable homes and other specifications within the house itself. It doesn't matter if the economy is on the rise or declining.

Myth: Just examining what the house looks like on its exterior gives a good idea of its worth.

Fact: House worth is concluded by a number of variables, including - but not limited to - location, condition, improvements, amenities, and market trends. An outside-only inspection definitely can't provide all of the information needed.

Myth: Considering that the consumer is the party who provides the money to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal report is theirs.

Fact: Legally, the appraisal is owned by the lending company unless the lender relinquishes their interest in the appraisal. However, home buyers have to be supplied with a copy of the appraisal report upon written request, due to the Equal Credit Opportunity Act.

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

Fact: A consumer should definitely inspect their appraisal report; there might be some questions or some worries with the accuracy of the appraisal that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes an invaluable record for future reference, comprised of 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 proximity.