Appraisal myths & facts

Legally, a real estate appraiser is required to be state certified to perform substantiated appraisal reports for federally-supported transactions. The law gives you the right to get a copy of your finished appraisal from your lender after it has been provided. Contact TSH Real Estate and Appraisal Services, LLC if you have any concerns about the appraisal process.

Myth: The value that is ascertained by the appraiser is required to be exactly the same as the market value.

Fact: While most states uphold the idea that assessed value is the same as estimated market value, this generally is not the case. Interior remodeling that the assessor is not aware of and a lack of reassessment on nearby properties are excellent examples of why this occurs.

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

Fact: There is no real interest on the part of the appraiser in the outcome of the report, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is ordered.

Myth: Market value will be the same as replacement cost.

Fact: Market value is found by what a willing buyer would likely pay a willing seller for a certain property, with neither being under undue influence to buy or sell. Replacement value is the dollar amount necessary to reconstruct a property in-kind.

Myth: Appraisers use a calculation, such as a certain price per square foot, to come to the value of a home.

Fact: There are many different calculations that an appraiser will use to make a full analysis of every factor pertaining to the house, such as the size, location, condition, how close it is to specific facilities and the sales price of recently sold comparable houses.

Myth: In a strong economy - when the values of homes in a given neighborhood are found to be increasing by a particular percentage - the prices of individual homes in the vicinity can be expected to rise by that same percentage.

Fact: All appreciation of worth is on an individual basis, concluded by data on relevant conditions and the data of comparable homes. It makes no difference whether the economy is powerful or bad.

Myth: You can generally see what a house is worth simply by looking at the outside.

Fact: To conclude an accurate value beyond all doubt, an appraiser must examine the house 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 examining the house from the exterior.

Myth: Since you're the one providing the money for the appraisal when applying for your loan to purchase or refinance real estate, you own the provided appraisal.

Fact: Unless a lender releases its interest in the appraisal report, it is legally owned by the lending company that ordered the appraisal. Under the Equal Credit Opportunity Act, any consumer requesting a copy of the report must be given it by their lending agency.

Myth: There's no reason for consumers to even concern themselves with what the report contains so long as their lender is satisfied.

Fact: A consumer should definitely inspect their document; there will probably be some questions or some worries with the accuracy of the report that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of data contained in an appraisal 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.