Appraisal myths debunked

By law, an appraiser needs to be state-licensed to offer appraisals for federally-supported purchases. Also by law, you have the ability to request a copy of the completed report from your lending agency. Contact us if you have any concerns about the appraisal process.

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

Fact: It could be that California, like most states, supports the idea that the assessed value equals the market value; however, this certainly varies based on state-to-state. Often when interior remodeling has been done and the assessor is has not investigated the improvement or other houses in the area have not been reassessed for quite a while, it may vary wildly.

Myth: Depending on whether the appraisal is written for the buyer or the seller, the cost of the house will vary.

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

Myth: The replacement value of the property is always is on par with the market value.

Fact: Without any pressure from any external parties to buy or sell, market value is what a willing buyer would pay an interested seller for a particular house. If the home were rebuilt, the dollar amount necessary to do so would form the replacement cost.

Myth: There are specific methods that appraisers use to determine the opinion of value of a property, like the price per square foot.

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

Myth: In a strong economy - when the sales prices of properties in a given neighborhood are reported to be increasing by a certain percentage - the prices of individual homes in the proximity can be expected to increase by that same percentage.

Fact: All increase of price is on an individual basis, found by information on relevant considerations and the data of comparable homes. It makes no difference whether the economy is good or bad.

Myth: The property's outside is determinate of the actual worth of the house; it is unnecessary to do an interior inspection.

Fact: There are a number of different factors that conclude the value of a home; these factors include area, condition, improvements, amenities, and market trends. An external inspection definitely can't provide all of the information required.

Myth: Since you're the one funding for the appraisal when applying for the loan to purchase or refinance your house, you own the produced appraisal report.

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

Myth: Consumers need not worry about what is in their report so long as it satisfies the necessities 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. There is an incredible amount of data contained in an appraisal that could be useful to the home buyer 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 proximity.