Appraisal myths & facts

By law, an appraiser needs to be state-licensed to produce appraisals for federally-supported purchases. Also by law, you are entitled to request a copy of the finished report from your lender. Contact our professional staff if you have any questions about the appraisal process.

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

Fact: This is not often the case; 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 unaware of and a dearth of reassessment on nearby houses are excellent examples of why there might be a differential in price.

Myth: Depending on if the appraisal is provided for the buyer or the seller, the appraised value of the property will vary.

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

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

Fact: The way market value is found is based on what a home buyer would be willing to pay a willing seller for a home without being under pressure from any external group to purchase or sell. The dollar amount necessary to reconstruct a property is what forms the replacement cost.

Myth: Certain formulae, such as the price per square foot of the property, are what appraisers use to arrive at the cost of a house.

Fact: An appraisal report is a collection of data concluded from the house's size, location, proximity to certain facilities, the condition of the property and the value of recent comparable sales. You can depend on A. M. Appraisals's appraisers to be forthright in assessing this data.

Myth: As houses increase their worth by a specific percentage - in a robust economic state - the properties nearby are expected to increase by the same amount.

Fact: Cost increase of a certain home has to be concluded on a case-by-case basis, factoring in data on comparable houses and other relevant specifications within the house itself. This is true in good economic times as well as poor.

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

Fact: There are a number of different factors that show property value; these factors include location, condition, improvements, amenities, and market trends. There's no real way to get all of this data from just looking at the property from the exterior.

Myth: Since the consumer is the person who puts up the funding to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal is theirs.

Fact: Legally, the appraisal report is owned by the lending agency unless the lender relinquishes their interest in the document. By the Equal Credit Opportunity Act, any consumer demanding a copy of the report must be given one by their lender.

Myth: It doesn't mean anything to consumers what's in the appraisal report so long as it satisfies the necessities of their lending agency.

Fact: Only if consumers examine a copy of their 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. An report can double as a record for the future, as it contains an exorbitant amount of data - including, but certainly not limited to 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.