Common myths about appraising

It is mandated by the government that an appraiser must be state-licensed to offer appraisal reports for federally-supported home transactions in California. Also by law, you are entitled to demand a copy of the finished appraisal report from your lending agency. Contact us if you have any questions about the appraisal procedure.

Myth: Assessed value should always be equal to market value.

Fact: It might be that California, like most states, supports the idea that the assessed value is the same as the market value; however, this is not always true. Examples include when interior remodeling has happened and the assessor does not know about the improvements, or when homes in the area have not been reassessed for an extended time.

Myth: The value of a property will change depending upon if the appraisal is conducted for the buyer or the seller.

Fact: The appraiser has no personal interest in the outcome of the appraisal and should complete his task with independence, objectivity and impartiality - no matter for whom the appraisal is provided.

Myth: Any time market value is established, it should be similar to the replacement cost of the property.

Fact: Market value is found by what a willing buyer would be interested in paying a willing seller for a particular property, with neither being under undue influence to buy or sell. If the house were reconstructed, the dollar amount necessary to do so would set the replacement cost.

Myth: There are certain ways that appraisers use to find the opinion of value of a property, such as the price per square foot.

Fact: Appraisers complete a comprehensive analysis of all factors pertaining to the cost of a home, including its location, condition, size, proximity to facilities and recent opinion of value of comparable houses.

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

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

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

Fact: There are a number of different factors that determine the value of a home; these factors include location, condition, improvements, amenities, and market trends. An outside-only inspection certainly can't provide all of the information needed.

Myth: Because consumers pay for the appraisal when applying for loans to purchase or refinance their house, they legally own their appraisal.

Fact: Legally, the appraisal report is owned by the lending company unless the lender releases their interest in the report. Consumers have to be supplied with a version of the report through request because of the Equal Credit Opportunity Act.

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

Fact: Only if home buyers check out a copy of their report can they ensure its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can double as a record for the future, as it contains an incredible amount of data - 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 area.