Appraisal myths & facts

By law, an appraiser must be state-licensed to offer appraisals for federally-related purchases. You also have the right to demand a copy of the finished report from your lender. Contact Robert L Ripp, SRA if you have any questions about the appraisal procedure.

Myth: The value that is assessed by the appraiser is required to be exactly the same as the market value.

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

Myth: Depending on if the appraisal is done for the buyer or the seller, the cost of the property will vary.

Fact: The price of the home does not affect the salary of the appraiser; as a result, the appraiser has no vested interest in the worth of the home. This means that he will conduct job with impartiality and independence regardless for whom the appraisal is conducted.

Myth: Market value should equal replacement cost.

Fact: The way market value is arrived at is based on what a home buyer would likely pay a willing seller for a property without being under influence from any outside party to purchase or sell. The dollar amount required to reconstruct a house is what shows the replacement cost.

Myth: Certain formulae, such as the price per square foot of the property, are the methods appraisers use to arrive at the worth of a home.

Fact: Appraisers complete a full analysis of all factors in consideration to the worth of a home, including its location, condition, size, proximity to facilities and recent worth of comparable houses.

Myth: As homes appreciate by a specific percentage - in a robust economic state - the houses within the same neighborhood are figured to increase by the same amount.

Fact: Price increase of a specific house is always concluded on a case-by-case basis, factoring in data on comparable houses and other relevant elements. This is true in excellent economic times as well as bad.

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

Fact: Home worth is determined by a multitude of factors, including - but not limited to - location, condition, improvements, amenities, and market trends. As you can see, none of these factors can be derived simply by examining the property from the exterior.

Myth: Because consumers fund the appraisal when applying for loans to buy or refinance their home, they legally own their appraisal report.

Fact: The report is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the appraisal. Home buyers have to be supplied with a version of the report through request due to the Equal Credit Opportunity Act.

Myth: Home buyers need not care about what is in their appraisal report so long as it exceeds the necessities of their lending institution.

Fact: It is a very good idea for consumers to go through a copy of their appraisal report so that they can double-check the accuracy of the document, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can double as a record for the future, containing an incredible amount of information - including, but certainly 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.

Myth: Appraisers are hired only to assess real estate property values in home sales involving mortgage-lending deals.

Fact: Ordering an appraisal can fulfill a variety of needs depending on the designations and certifications of the appraiser involved; appraisers can perform a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.

Myth: There's no need to get an appraisal if you get a home inspection.

Fact: Appraisal reports have almost nothing in common with a home inspection. The task of the appraiser is to come to an opinion of value in the appraisal process and through producing the report. The point of a home inspector is to determine the condition of the home and its major components, then write a report on these findings.