Appraisal myths & facts

It is required by law that an appraiser must be state-licensed to create appraisals for federally-supported property transactions in Tennessee. Also by law, you are allowed to request a copy of the completed appraisal from your lender. Contact our professional staff if you have any concerns about the appraisal process.

Myth: Assessed value will always be the same as to market value.

Fact: While most states support the suggestion that assessed value equates estimated market value, this usually is not the case. Usually when interior remodeling has occurred and the assessor is not aware of the improvement or properties in the neighborhood have not been reassessed for quite some time, it may vary wildly.

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

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

Myth: The replacement cost of the house should be is on par with the market value.

Fact: The way market value is found is based on what a buyer would likely pay a willing seller for a house without being under duress from any outside group to buy or sell. If the house were rebuilt, the dollar amount required to do so would be the replacement cost.

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

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

Myth: When the economy is strong and the worth of homes are reported to be appreciating by a certain percentage, the other homes in the vicinity can be expected to appreciate based on that same percentage.

Fact: All appreciation of value is on an individual basis, found by data on relevant considerations and the data of comparable houses. It makes no difference whether the economy is strong or terrible.

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

Fact: To determine an accurate worth beyond all doubt, an appraiser must assess the house on a variety of factors based on area, condition, improvements, amenities, and current market trends. There's no possible way to get all of this information from just viewing the home from the outside.

Myth: Considering that the consumer is the person who provides the funding to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal belongs to them.

Fact: Unless a lender releases its interest in the appraisal report, it is legally owned by the lending agency that ordered the appraisal. Consumers have to be provided with a copy of the document through request due to the Equal Credit Opportunity Act.

Myth: There's no point for consumers to even care about what the appraisal report contains so long as their lending institution is fine with the contents therein.

Fact: Only if consumers look over a copy of their report can they ensure 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 makes an invaluable record for future reference, comprised of helpful 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.