Appraisal myths debunked

Legally, an appraiser has to be state certified to create legitimate real estate appraisals for federally-related sales. Also by law, you have the ability to receive a copy of the completed appraisal report from your lending agency. Contact our professional staff if you have any concerns about the appraisal process.

Myth: Assessed value should be similar to 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. 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 prolonged time.

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

Fact: There is no vested interest on the part of the appraiser in the result of the analysis, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is created.

Myth: Any time market value is established, it should be similar to the replacement cost of the property.

Fact: The way market value is arrived at is based on what a buyer would likely pay a willing seller for a house without being under pressure from any external group to buy or sell. The dollar amount needed to reconstruct a home is what shows the replacement cost.

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

Fact: There are many varied formulae that an appraiser will use to make a comprehensive investigation of every factor in consideration of the property, such as the size, location, condition, how close it is to undesirable facilities and the sales price of recently sold comparable homes.

Myth: As houses increase their worth by a certain percentage - in a robust economic state - the houses around the appreciating properties are expected to appreciate by the same amount.

Fact: Any price at which an appraiser arrives in regards to a specific property is always individualized, based on certain factors derived from the information of comparable homes and other specifications within the home itself. It makes no difference whether the economy is good or on the decline.

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

Fact: To determine an accurate price beyond all doubt, an appraiser must inspect the property on a variety of factors based on location, condition, improvements, amenities, and market trends. An outside-only inspection definitely can't provide all of the information necessary.

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, by law the appraisal is theirs.

Fact: Unless a lending agency releases its interest in the appraisal report, it is legally owned by the lending agency that ordered the appraisal. Home buyers have to be provided with a version of the report through request as per the Equal Credit Opportunity Act.

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

Fact: A home buyer should definitely read through their document; there will probably be some questions or some concerns about the accuracy of the inspection that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can double as a record for the future, containing a great deal of information - including, but not limited to 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 vicinity.