Appraisal myths & facts

By law, an appraiser must be state-licensed to perform appraisals for federally-supported purchases. You are also entitled by law to request a copy of the finished report from your lender. Contact us if you have any concerns about the appraisal procedure.

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

Fact: While most states uphold the suggestion that assessed value is equal to estimated market value, this usually is not the case. At times when interior remodeling has occurred and the assessor is has not investigated the improvement or other homes in the neighborhood have not been reassessed for a good length of time, it may vary wildly.

Myth: The buyer or the seller may have impact in the cost of the property depending upon for whom the appraiser is working.

Fact: There is no personal interest on the part of the appraiser in the result of the 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 will be is on par with the market value.

Fact: The way market value is derived is based on what a home buyer would be willing to pay a willing seller for a property without being under duress from any outside group to purchase or sell. The dollar amount demanded to reconstruct a house is what shows the replacement cost.

Myth: Appraisers use a calculation, such as a certain price per square foot, to figure out the worth of a property.

Fact: An appraisal is an assertion of information concluded from the home's size, location, proximity to certain facilities, the condition of the property and the price of recent comparable sales. You can count on Appraisers Cooperative Inc.'s staff to be forthright in assessing this information.

Myth: In a robust economy - when the sales prices of houses in a given area are reported to be appreciating by a certain percentage - the costs of individual properties in the proximity can be expected to increase by that same percentage.

Fact: Cost appreciation of a specific property must be determined on an individualized basis, factoring in information on comparable homes and other relevant specifications within the property itself. It makes no difference whether the economy is robust or on the decline.

Myth: You can usually tell what a house is worth simply by looking at the exterior.

Fact: House worth is concluded by a multitude of factors, including - but not limited to - area, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from just looking at the property from the exterior.

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

Fact: Unless a lender releases its vestment in the report, it is legally owned by the lending company that ordered the appraisal. Consumers must be provided with a copy of the document upon written request as per the Equal Credit Opportunity Act.

Myth: There's no need for consumers to even concern themselves with what the appraisal report contains so long as their lending institution is satisfied.

Fact: Only if consumers examine a copy of their appraisal 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 a wealth of data contained in an appraisal 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 proximity.