Appraisal myths debunked

By law, an appraiser is enforced to be state-licensed to produce appraisals for federally-backed transactions. The law gives you the right to get a copy of your completed appraisal report from your lender after it has been provided. Contact our professional staff if you have any questions 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 equal to estimated market value, this generally is not the case. Examples include when interior reconstruction has occurred and the assessor is unaware of the improvements, or when houses in the area have not been reassessed for an extended period of time.

Myth: Depending on if the appraisal is produced for the buyer or the seller, the cost of the property will vary.

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

Myth: Any time market value is established, it should be the same as the replacement cost of the home.

Fact: Market value is acquired by what a willing buyer would likely pay a willing seller for a certain home, with neither being under undue influence to buy or sell. If the property were rebuilt, the dollar amount required to do so would form the replacement cost.

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

Fact: An appraisal report is a collection of data concluded from the property's size, location, proximity to certain facilities, the condition of the house and the cost of recent comparable sales. You can count on Performance Appraisals Inc.'s staff to be ethical in assessing this data.

Myth: In a powerful economy - when the values of homes in a given region are reported to be rising by a particular percentage - the costs of individual homes in the vicinity can be expected to increase by that same percentage.

Fact: Any price at which an appraiser concludes in regards to a particular property is always personalized, based on certain factors concluded from the data of comparable homes and other specifications within the property itself. It makes no difference whether the economy is robust or poor.

Myth: Just seeing what the home looks like on its exterior gives a good idea of its value.

Fact: To determine an accurate worth beyond all doubt, an appraiser must examine the house on a variety of factors based on area, condition, improvements, amenities, and current market trends. Obviously, none of these variables can be derived just by examining the home from the exterior.

Myth: Because consumers pay for the appraisal when applying for loans to buy or refinance their property, they legally own their appraisal.

Fact: Legally, the report is owned by the lending agency unless the lender relinquishes their interest in the document. Because of the Equal Credit Opportunity Act, any home buyer asking for a copy of the document must be provided with one by their lending agency.

Myth: There's no reason for home buyers to even worry about what the appraisal contains so long as their lender is satisfied.

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 report makes an excellent record for future reference, filled with helpful and often-revealing information - including, but 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 proximity.