Appraisal myths & facts

      Legally, a real estate appraiser is required to be state certified to write substantiated appraisal reports for federally backed transactions. You have the ability to request a copy of the finished report from your lender. Contact us if you have any concerns about the appraisal procedure.

Myth: Market value needs to be equivalent to the assessed value of the property.

Fact: Although many states operate under the assumption that the assessed values closely approximate the estimated market value, this is not always the reality. Factors such as interior remodeling, lack of reassessment, and other property-specific conditions can lead to significant variations between assessed value and actual market value. 

Myth: An appraisal report is equivalent to a home inspection. 

Fact: However, these two serve distinct purposes. During the appraisal process, an appraiser determines the value of a property, providing an opinion of value based on market factors, comparable properties, and overall worth. In contrast, a home inspector assesses the condition of the building and its key components, reporting on structural integrity, systems, and potential issues. Remember, an appraisal focuses on value, while a home inspection delves into the property’s physical state. 

Myth: Market value should be identical to replacement cost. 

Fact: Market value is determined by what a home buyer would pay a willing seller, independent of external influences. Replacement value, on the other hand, represents the amount required to rebuild a house in-kind.

Myth: Appraisers rely solely on price per square foot, to determine a house’s worth. 

Fact: Appraisers employ various methods, considering factors like size, location, condition, proximity to undesirable facilities, and recent comparable property values, for a comprehensive analysis of a house’s value.

Myth: When properties increase in value by a certain percentage during robust economic times, neighboring properties are expected to increase by the same amount. 

Fact: Appraisers personalize their conclusions for specific properties, considering factors derived from comparable property data and unique specifications within the home. This holds true regardless of economic conditions, whether strong or poor.

Myth: The home’s exterior alone determines the actual worth of the property, rendering an interior appraisal unnecessary. 

Fact: Property value is influenced by various factors, such as area, condition, improvements, amenities, and market trends. An external inspection alone cannot provide all the necessary information for an accurate assessment.

Myth: If you’re paying for the appraisal when applying for a loan to purchase or refinance real estate, you automatically own the appraisal. 

Fact: The truth is that the appraisal report is legally owned by the lending agency unless the lender explicitly “relinquishes its interest” in the appraisal. However, home buyers are entitled to receive a copy of the report upon written request, as mandated by the Equal Credit Opportunity Act.

Myth: Home buyers need not worry about the appraisal report as long as their lending agency is satisfied. 

Fact: It is crucial for consumers to review their appraisal report. By doing so, they can verify its accuracy and potentially question any discrepancies. Remember, buying a home is likely the most significant and important investment a consumer will ever make. Additionally, the appraisal report serves as an invaluable record for future reference. It contains essential and often-revealing details, including the legal and physical property description, square footage measurements, a list of comparable properties in the neighborhood, neighborhood description, and a narrative on current real estate activity and market trends in the vicinity.