Common myths about appraising

By law, an appraiser needs to be state-licensed to offer appraisals for federally-backed transactions. Also by law, you are entitled to receive a copy of the finished appraisal from your lender. Contact James Earp Appraisal Service if you have any concerns about the appraisal process.

Myth: Assessed value will always equate to market value.

Fact: While most states support the concept that assessed value is equal to estimated market value, this often is not the case. Sometimes when interior remodeling has been done and the assessor is unaware of the improvement or other houses in the area have not been reassessed for years or more, it may vary wildly.

Myth: The opinion of value of a property will change depending upon whether the appraisal is produced for the buyer or the seller.

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

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

Fact: Without any pressure from any external parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a particular home. The replacement cost is the dollar amount necessary to rebuild a house in-kind.

Myth: Certain formulae, like the price per square foot of the property, are what appraisers use to come to the value of a property.

Fact: An appraisal report is a collection of information based on the home's size, location, proximity to some facilities, the condition of the home and the value of recent comparable sales. You can rely on James Earp Appraisal Service's appraisers to be ethical in assessing this data.

Myth: As homes increase their worth by a certain percentage - in a strong economy - the houses around the appreciating properties are expected to appreciate by the same amount.

Fact: All appreciation of value is on a one-on-one basis, determined by data on relevant considerations and the data of comparable properties. This is true in good economic times as well as poor.

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

Fact: There are a multitude of different factors that show the value of a house; these factors include area, condition, improvements, amenities, and market trends. An exterior inspection certainly can't provide all of the information necessary.

Myth: Considering that the consumer is the one who puts up the capital to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.

Fact: Legally, the document is owned by the lender unless the lender relinquishes their interest in the appraisal. However, home buyers must be given a copy of the document upon written request, through the Equal Credit Opportunity Act.

Myth: Consumers need not care about what is in their report so long as it exceeds the needs of their lending agency.

Fact: A consumer should definitely look through their appraisal; there could be some questions or some concerns with the accuracy of the inspection that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes an invaluable 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.