Appraisal myths debunked

It is mandated by the government that an appraiser must be state-licensed to produce appraisal reports for federally-supported property purchases in California. You have the ability to request a copy of the finished appraisal from your lending agency. Contact our professional staff if you have any questions about the appraisal procedure.

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

Fact: While most states support the concept that assessed value approximates estimated market value, this often is not the case. Generally when interior remodeling has occurred and the assessor is not aware of the improvement or other houses in the area have not been reassessed for quite a while, it may vary wildly.

Myth: The appraised value of a property will differ depending upon whether the appraisal is ordered for the buyer or the seller.

Fact: The appraiser has no vested interest in the outcome of the appraisal report and should render his job with independence, objectivity and impartiality - no matter for whom the appraisal is provided.

Myth: The replacement value of the home is always is on par with the market value.

Fact: Without any pressure from any outside parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific home. If the property were reconstructed, the dollar amount needed to do so would set the replacement cost.

Myth: Specific formulae, like the price per square foot of the property, are what appraisers use to come to the value of a home.

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

Myth: As properties appreciate by a certain percentage - in a robust economy - the homes within the same neighborhood are expected to appreciate by the same amount.

Fact: Cost appreciation of a certain property must be concluded on a case-by-case basis, factoring in data on comparable houses and other relevant elements. It makes no difference if the economy is powerful or poor.

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Myth: Just examining what the property looks like on the outside gives an idea of its value.

Fact: To determine an accurate value beyond all doubt, an appraiser must assess the house on a variety of factors based on area, condition, improvements, amenities, and current market trends. There's no real way to get all of this information from just viewing the house from the exterior.

Myth: Since you're the one paying for the appraisal when applying for the loan to purchase or refinance real estate, you own the provided appraisal report.

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

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

Fact: Only if consumers read a copy of their report 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. Also, the appraisal report makes an excellent record for future reference, filled with useful and often-revealing data - including 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.

Myth: There is no reason to hire an appraiser unless you are trying to get an estimate of the cost of a property during a sales transaction involving a lender.

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

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

Fact: Appraisal reports are completely different than a home inspection. The task of the appraiser is to arrive at an opinion of value in the appraisal process and through writing the report. House inspectors will create a report that will explain the condition of the home and its major components and possible damage.