Appraisal myths & facts

By law, an appraiser needs to be state-licensed to produce appraisals for federally-supported purchases. Also by law, you have the right to demand a copy of the completed appraisal report from your lending agency. Contact JTH Appraisals if you have any concerns about the appraisal process.

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

Fact: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. Interior reconstruction that the assessor is not aware of and a lack of reassessment on nearby houses are exact examples of why this occurs.

Myth: The buyer or the seller often will have some pull in the value of the house depending upon for whom the appraiser is working.

Fact: The cost of the property does not affect the pay of the appraiser; due to this, the appraiser has no personal interest in the opinion of value of the house. Obviously, he will render services with impartiality and objectivity regardless for whom the appraisal is provided.

Myth: The replacement cost of the home will be is on par with the market value.

Fact: Market value is acquired by what a willing buyer would likely pay a willing seller for a certain house, with neither being under pressure to buy or sell. The replacement cost is the dollar amount required to rebuild a house in-kind.

Myth: Appraisers use a formula, like a certain price per square foot, to come to the value of a home.

Fact: Appraisers make a full analysis of all factors in consideration to the worth of a property, including its location, condition, size, proximity to facilities and recent values of comparable properties.

Myth: As homes appreciate by a certain percentage - in a robust economy - the houses nearby are expected to appreciate by the same amount.

Fact: All increase of worth is on an individual basis, determined by data on relevant considerations and the data of comparable houses. It makes no difference if the economy is good or poor.

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

Fact: Home worth is determined by a multitude of variables, including - but not limited to - location, condition, improvements, amenities, and market trends. An outside-only inspection definitely can't provide all of the information necessary.

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

Fact: Unless a lender releases its interest in the appraisal report, it is legally owned by the lending company that ordered the appraisal. Home buyers have to be supplied with a version of the document through request because of the Equal Credit Opportunity Act.

Myth: Consumers need not worry about what is in their report so long as it meets the needs of their lending agency.

Fact: Only if consumers examine 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 an incredible amount of data stored in an appraisal that can 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 vicinity.