Appraisal myths debunked

It is enforced by law that a real estate appraiser needs to be state-licensed to offer appraisals for federally-related home transactions in California. Also by law, you are allowed to request a copy of the finished appraisal report from your lender. Contact The Appraisal Firm if you have any concerns about the appraisal process.

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

Fact: While most states uphold the idea that assessed value is equal to estimated market value, this generally is not the case. Sometimes when interior remodeling has occurred and the assessor is has not investigated the improvement or other houses in the neighborhood have not been reassessed for quite a while, it may vary wildly.

Myth: The opinion of value of a house will vary depending upon whether the appraisal is ordered for the buyer or the seller.

Fact: There is no vested interest on the part of the appraiser in the result of the report, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is ordered.

Myth: Any time market value is established, it should equal the replacement cost of the home.

Fact: The way market value is derived is based on what a buyer would be willing to pay a willing seller for a property without being under pressure from any external group to buy or sell. The dollar amount required to rebuild a home is what forms the replacement cost.

Myth: There are specific methods that appraisers use to determine the opinion of value of a home, like the price per square foot.

Fact: An appraisal report is a collection of information based on the home's size, location, proximity to some facilities, the condition of the property and the worth of recent comparable sales. You can count on The Appraisal Firm's appraisers to be professional in assessing this information.

Myth: When the economy is doing well and the worth of properties are reported to be rising by a certain percentage, the other properties in the vicinity can be expected to rise based on that same percentage.

Fact: Worth appreciation of a certain house has to be concluded on an individualized basis, factoring in information on comparable homes and other relevant specifications within the house itself. It doesn't matter if the economy is on the rise or declining.

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

Fact: To find an accurate worth beyond all doubt, an appraiser must inspect the house on a variety of factors based on location, condition, improvements, amenities, and market trends. An outside-only inspection obviously can't provide all of the data needed.

Myth: Because the consumer is the one who puts up the capital to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal is theirs.

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

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

Fact: A home buyer should definitely read through their report; there might be some questions or some worries with the accuracy of the appraisal report that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes an excellent record for future reference, containing useful and often-revealing information - 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 area.