Appraisal myths & facts

By law, an appraiser must be state-licensed to produce appraisals for federally-backed purchases. You also have the right to demand a copy of the finished appraisal from your lender. Contact us if you have any concerns about the appraisal procedure.

Myth: Market value will be similar to the assessed value of the property.

Fact: While most states support the suggestion that assessed value is the same as estimated market value, this usually is not the case. Examples include when interior remodeling has happened and the assessor is unaware of the improvements, or when properties in the area have not been reassessed for an extended period of time.

Myth: The buyer or the seller will have some pull in the cost of the home depending upon for whom the appraiser is working.

Fact: The appraised value of the home does not affect the salary of the appraiser; as a result, the appraiser has no preconceived interest in the value of the house. This means that he will provide services with impartiality and objectivity regardless for whom the appraisal is conducted.

Myth: Any time market value is established, it should equate to the replacement cost of the house.

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. Replacement cost is the dollar amount necessary to rebuild a house in-kind.

Myth: There are certain ways that appraisers use to find the cost of a property, like the price per square foot.

Fact: Appraisers make a full analysis of all factors in consideration to the value of a property, including its location, condition, size, proximity to facilities and recent costs of comparable properties.

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

Fact: All appreciation of worth is on a one-on-one basis, concluded by information on relevant considerations and the data of comparable houses. It makes no difference if the economy is excellent or terrible.

Myth: You can commonly find what a home is worth simply by looking at the exterior.

Fact: There are a number of different variables that determine property value; these factors include area, condition, improvements, amenities, and market trends. Obviously, none of these factors can be found just by viewing the house from the outside.

Myth: Since the consumer is the party who puts up the capital to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report is theirs.

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

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

Fact: It is a very good idea for home buyers to go through a copy of their report so that they can double-check the accuracy of the report, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes an invaluable record for future reference, filled with helpful 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 vicinity.