Appraisal myths debunked

By law, an appraiser needs to be state-licensed to offer appraisals for federally-related sales. You also have the right to receive a copy of the completed report from your lender. Contact Walz Appraisal if you have any questions about the appraisal process.

Myth: The value that is ascertained by the appraiser must be the same as the market value.

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

Myth: Depending on if the appraisal is produced for the buyer or the seller, the value of the house will vary.

Fact: There is no real interest on the part of the appraiser in the result of the appraisal, therefore he will complete his work with impartiality and independence, regardless for whom the appraisal is conducted.

Myth: Market value will approximate replacement cost.

Fact: Market value is arrived at through what a willing buyer would be interested in paying a willing seller for a particular house, with neither being under undue influence to buy or sell. The dollar amount needed to reconstruct a house is what constitutes the replacement cost.

Myth: There are specific ways that real estate appraisers use to show the cost of a property, like the price per square foot.

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

Myth: When the economy is on the rise and the cost of homes are found to be increasing by a certain percentage, the other houses in the proximity can be expected to increase based on that same percentage.

Fact: All appreciation of value is on a one-on-one basis, concluded by data on relevant conditions and the data of comparable homes. This is true in strong economic times as well as bad.

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

Fact: To conclude an accurate value beyond all doubt, an appraiser must examine the property on a variety of factors based on location, condition, improvements, amenities, and market trends. Obviously, none of these things can be derived just by viewing the property from the exterior.

Myth: Since you're the one paying for the appraisal report when applying for the loan to buy or refinance your home, you own the produced appraisal.

Fact: Legally, the document is owned by the lending agency unless the lender relinquishes their interest in the appraisal. Due the Equal Credit Opportunity Act, any consumer asking for a copy of the document must be given one by their lender.

Myth: There's no reason for home buyers to even concern themselves with what the report contains so long as their lending agency is fine with the contents therein.

Fact: A consumer should definitely inspect their appraisal; there might be some questions or some concerns with the accuracy of the report that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of data contained in an appraisal report that should 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 vicinity.