Appraisal myths & facts

Legally, a real estate appraiser is required to be state certified to produce substantiated appraisal reports for federally-related purchase. The law allows you to acquire a copy of your completed appraisal from your lending agency after it has been produced. Contact Tri-Cities Appraisal Services, LLC if you have any concerns about the appraisal procedure.

Myth: Market value has to be similar to the assessed value of the property.

Fact: This usually isn't true; most states do support the idea that the assessed value is the same as market value, but not always. Examples include when interior reconstruction has occurred and the assessor does not know about the improvements, or when properties in the vicinity have not been reassessed for an extended period of time.

Myth: The buyer or the seller often will have an influence in the cost of the house depending upon for whom the appraiser is working.

Fact: The appraiser has no personal interest in the result of the report and should conduct his task with independence, objectivity and impartiality - no matter for whom the appraisal is written.

Myth: Any time market value is found, it should equate to the replacement cost of the house.

Fact: The way market value is arrived at is based on what a buyer would likely pay a willing seller for a property without being under influence from any external party to buy or sell. If the property were rebuilt, the dollar amount needed to do so would set the replacement cost.

Myth: Certain formulae, like the price per square foot, are the ways appraisers use to come to the cost of a house.

Fact: There are many varied calculations that an appraiser will use to make a comprehensive analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to certain facilities and the value of recently sold comparable houses.

Myth: When the economy is robust and the worth of houses are reported to be appreciating by a certain percentage, the other houses in the vicinity can be expected to appreciate based on that same percentage.

Fact: All increase of price is on a one-on-one basis, found by information on relevant elements and the data of comparable homes. It makes no difference if the economy is good or on the decline.

Myth: The home's exterior is determinate of the actual price of the home; there is no need to do an interior inspection.

Fact: To determine an accurate price beyond all doubt, an appraiser must assess the house on a variety of factors based on location, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from simply looking at the house from the exterior.

Myth: Since you're the one coughing up the cash for the appraisal when applying for the loan to buy or refinance real estate, you own the provided appraisal.

Fact: Unless a lending agency releases its interest in the report, it is legally owned by the lending company that ordered the appraisal. Consumers must be given a copy of the document through request due to the Equal Credit Opportunity Act.

Myth: There's no point for home buyers to even care about what the appraisal contains so long as their lender is satisfied.

Fact: It is very important for consumers to read a copy of their appraisal so that they can double-check the accuracy of the document, in case there is a need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of data stored in an appraisal that will probably be useful to the consumer 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.