Appraisal myths & facts

By law, an appraiser must be state-licensed to offer appraisals for federally-related transactions. You also have the right to receive a copy of the finished report from your lender. Contact our professional staff if you have any concerns about the appraisal procedure.

Myth: Assessed value will always be similar to to market value.

Fact: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always. Usually when interior remodeling has occurred and the assessor is unaware of the improvement or other homes in the area have not been reassessed for quite a while, it may vary wildly.

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

Fact: The appraiser has no vested interest in the result of the appraisal and should render services with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.

Myth: Any time market value is found, it should be similar to the replacement cost of the property.

Fact: Without any pressure from any outside parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a specific home. Replacement cost is the dollar amount needed to reconstruct a home in-kind.

Myth: There are specific methods that real estate appraisers use to determine the value of a property, such as the price per square foot.

Fact: There are many varied methods that an appraiser will use to make a full analysis of every factor pertaining to the property, such as the size, location, condition, how close it is to undesirable facilities and the sales price of recently sold comparable properties.

Myth: As homes increase their worth by a specific percentage - in a robust economy - the properties within the same neighborhood are figured to appreciate by the same amount.

Fact: Price increase of a certain house must be concluded on an individualized basis, factoring in data on comparable homes and other relevant considerations. It doesn't matter if the economy is doing well or declining.

Myth: Just examining what the house looks like on the outside gives an idea of its cost.

Fact: To find an accurate worth beyond all doubt, an appraiser must examine the house on a variety of factors based on location, condition, improvements, amenities, and market trends. An outside-only inspection obviously can't provide all of the data required.

Myth: Because consumers fund appraisals when applying for loans to buy or refinance their home, they own their appraisal.

Fact: Legally, the document is owned by the lending agency unless the lender releases their interest in the document. However, consumers must be given a copy of the report upon written request, due to the Equal Credit Opportunity Act.

Myth: There's no point for home buyers to even worry about what the appraisal report contains so long as their lending agency is fine with the contents therein.

Fact: It is almost imperative for home buyers to peruse a copy of their report so that they can verify the accuracy of the report, in case there is a need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of data stored in an report 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 proximity.