Appraisal myths debunked

Legally, an appraiser is required to be state certified to produce legitimate appraisal reports for federally-backed sales. The law entitles you to acquire a copy of your completed appraisal report from your lender after it has been produced. Contact Race Appraisal Services, LLC if you have any questions about the appraisal process.

Myth: Assessed value should always equate to market value.

Fact: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always. Examples include when interior remodeling has happened and the assessor is unaware of the improvements, or when properties in the vicinity have not been reassessed for an prolonged period.

Myth: Depending on whether the appraisal is done for the buyer or the seller, the appraised value of the home will vary.

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

Myth: Market value will equate to replacement cost.

Fact: The way market value is found is based on what a buyer would likely pay a willing seller for a house without being under influence from any outside group to purchase or sell. If the property were reconstructed, the dollar amount needed to do so would make up the replacement cost.

Myth: There are certain ways that appraisers use to determine the cost of a home, such as the price per square foot.

Fact: Appraisers complete an exhaustive analysis of all factors in consideration to the worth of a home, including its location, condition, size, proximity to facilities and recent values of comparable homes.

Myth: In a robust economy - when the costs of houses in a given county are reported to be rising by a particular percentage - the costs of individual homes in the proximity can be expected to increase by that same percentage.

Fact: Any value at which an appraiser arrives in regards to a certain house is always personalized, based on certain factors concluded from the data of comparable properties and other considerations within the house itself. It doesn't matter if the economy is doing well or declining.

Myth: Just examining what the house looks like on the outside gives an excellent idea of its worth.

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

Myth: Because the consumer is the one who provides the capital to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.

Fact: The report is, in fact, legally owned by the lending agency - unless the lender "relinquishes its interest" in the document. Due the Equal Credit Opportunity Act, any consumer asking for a copy of the report must be provided with it by their lender.

Myth: Consumers need not worry about what is in their document so long as it satisfies the requirements of their lending institution.

Fact: Only if consumers check out a copy of their appraisal 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. There is a great deal of data stored in an report that could be useful to the home buyer 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 area.