Appraisal myths debunked

By law, an appraiser is enforced to be state-licensed to perform appraisals for federally-backed transactions. The law allows you to acquire a copy of your finished appraisal report from your lending agency after it has been provided. Contact Holt Appraising, Inc. if you have any concerns about the appraisal process.

Myth: When purchasing a home using a lending institution, an appraiser is hired by the borrower

Myth: The money put into a home translates dollar-for-dollar into a higher appraisal

Myth: The appraiser didn't include my finished basement in the square footage of my house

Myth: Market value will be equivocal to the tax assessed value of the property.

Fact: It is a common misconception that the tax assessed value equates estimated market value.  Assessed values are nothing more than a yardstick for a municipality to collect an appropriate amount of taxes to sufficiently cover the state and local appropriations chargeable to the city or town. 

Myth: The appraised value of a house will be different depending upon whether the appraisal is provided for the buyer or the seller.

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

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

Fact: The way market value is arrived at is based on what a buyer would be willing to pay a willing seller for a home without being under influence from any outside group to buy or sell. Replacement cost is the dollar amount necessary to reconstruct a property in-kind.

Myth: Appraisers use a formula, like a specific price per square foot, to arrive at the cost of a home.

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

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

Fact: Any price at which an appraiser concludes in regards to a certain property is always individualized, based on certain factors pulled from the data of comparable houses and other considerations within the home itself. This is true in strong economic times as well as bad.

Myth: The house's outside is determinate of the actual price of the house; it is unnecessary to do an interior inspection.

Fact: To find an accurate value beyond all doubt, an appraiser must examine the property on a variety of factors based on area, condition, improvements, amenities, and market trends. Obviously, none of these things can be found just by viewing the home from the outside.

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

Fact: The report is, in fact, legally owned by the lender - unless the lender "releases its interest" in the document. However, consumers have to be given a copy of the report upon written 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 meets the needs of their lending group.

Fact: Only if consumers read a copy of their appraisal 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. Also, the appraisal report makes an excellent record for future reference, containing helpful and often-revealing information - including 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.