Common myths about appraising

Legally, a real estate appraiser is required to be state certified to write substantiated real estate appraisals for federally-backed transactions. You are also entitled by law to receive a copy of the finished appraisal from your lender. Contact us if you have any concerns about the appraisal process.

Myth: The value that is ascertained by the appraiser must be equivalent to the market value.

Fact: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always. Examples include when interior remodeling has occurred and the assessor is unaware of the improvements, or when properties in the area have not been reassessed for an prolonged period.

Myth: The buyer or the seller often will have leverage in the value of the home depending upon for whom the appraiser is working.

Fact: The appraiser has no vested interest in the result of the appraisal report and should render his job with independence, objectivity and impartiality - no matter for whom the appraisal is provided.

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

Fact: Market value is acquired by what a willing buyer would likely pay a willing seller for a certain property, with neither being under duress to buy or sell. The dollar amount demanded to rebuild a home is what constitutes the replacement cost.

Myth: There are certain ways that appraisers use to show the value of a house, like the price per square foot.

Fact: Appraisers complete a full analysis of all factors pertaining to the value of a property, including its location, condition, size, proximity to facilities and recent values of comparable homes.

Myth: In a robust economy - when the costs of properties in a given region are found to be increasing by a certain percentage - the prices of individual properties in the vicinity can be expected to rise by that same percentage.

Fact: All increase of price is on an individual basis, determined by information on relevant considerations and the data of comparable houses. This is true in fair economic times as well as bad.

Myth: You can generally tell what a home is worth simply by looking at the outside.

Fact: There are a multitude of different variables that determine property value; these factors include location, condition, improvements, amenities, and market trends. There's no real way to get all of this information from simply examining the house from the outside.

Myth: Since the consumer is the one who provides the capital to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal report is theirs.

Fact: The appraisal report is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the document. Because of the Equal Credit Opportunity Act, any home buyer demanding a copy of the appraisal report must be provided with one by their lending company.

Myth: It doesn't matter to consumers what's in the appraisal report so long as it meets the requirements of their lending company.

Fact: It is very important for consumers to look at a copy of their report so that they can double-check the accuracy of the document, in case it's required to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of data stored in an report that could 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 vicinity.