Appraisal myths & facts

Legally, an appraiser must be state certified to produce substantiated appraisal reports for federally-supported transactions. The law allows you to receive a copy of your finished appraisal report from your lending agency after it has been produced. Contact James Wagner if you have any questions about the appraisal procedure.

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

Fact: While most states uphold the suggestion that assessed value is equal to estimated market value, this often is not the case. Interior remodeling that the assessor is not aware of and a dearth of reassessment on nearby homes are prime examples of why there might be a differential in price.

Myth: The buyer or the seller may have an influence in the cost 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 complete his work with impartiality and independence, despite for whom the appraisal is created.

Myth: Market value will equate to replacement cost.

Fact: Without any influence from any different parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a specific property. Replacement cost is the dollar amount required to rebuild a home in-kind.

Myth: There are specific ways that appraisers use to find the value of a property, such as the price per square foot.

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

Myth: In a robust economy - when the sales prices of homes in a given area are found to be increasing by a certain percentage - the values of individual properties in the area can be expected to appreciate by that same percentage.

Fact: Any cost at which an appraiser arrives in regards to a certain home is always personalized, based on certain factors derived from the data of comparable properties and other specifications within the home itself. It doesn't matter if the economy is on the rise or declining.

Myth: Just examining what the home looks like on the outside gives a good idea of its cost.

Fact: To determine an accurate value beyond all doubt, an appraiser must inspect the house on a variety of factors based on location, condition, improvements, amenities, and market trends. Obviously, none of these factors can be found simply by viewing the property from the outside.

Myth: Considering that the consumer is the person who puts up the capital to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal report belongs to them.

Fact: The report is, in fact, legally owned by the lender - unless the lender "releases its interest" in the appraisal report. Consumers must be supplied with a version of the report upon written request because of the Equal Credit Opportunity Act.

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

Fact: A consumer should definitely look through their report; there could be some questions or some worries about the accuracy of the appraisal report that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes a valuable record for future reference, containing useful and often-revealing data - 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 proximity.