Common myths about appraising

By law, an appraiser is required to be state-licensed to produce appraisals for federally-supported sales. You are also entitled by law to acquire a copy of the finished report from your lender. Contact us if you have any concerns about the appraisal process.

Myth: The value that is ascertained by the appraiser must be equivalent to the 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. Interior reconstruction that the assessor is unaware of and a dearth of reassessment on nearby homes are perfect examples of why the price can vary.

Myth: The buyer or the seller sometimes may have leverage in the cost of the home depending upon for whom the appraiser is working.

Fact: The opinion of value of the home does not affect the salary of the appraiser; as such, the appraiser has no vested interest in the worth of the home. Obviously, he will conduct services with impartiality and objectivity regardless for whom the appraisal is produced.

Myth: The replacement cost of the house is always is on par with the market value.

Fact: Market value is acquired by what a willing buyer would be interested in paying a willing seller for a particular home, with neither being under pressure to buy or sell. The replacement cost is the dollar amount required to rebuild a house in-kind.

Myth: Specific methods, like the price per square foot, are what appraisers use to arrive at the cost of a property.

Fact: An appraisal report is an amalgamation of information based on the house's size, location, proximity to some facilities, the condition of the house and the price of recent comparable sales. You can rely on James Earp Appraisal Service's staff to be forthright in assessing this information.

Myth: As houses increase their worth by a certain percentage - in a strong economic state - the homes nearby are expected to appreciate by the same amount.

Fact: All increase of worth is on a one-on-one basis, determined by data on relevant conditions and the data of comparable homes. It doesn't matter if the economy is on the rise or declining.

Myth: The property's outside is determinate of the actual value of the home; it is unnecessary to do an interior inspection.

Fact: To find an accurate price beyond all doubt, an appraiser must inspect the house on a variety of factors based on area, condition, improvements, amenities, and current market trends. As you can see, none of these variables can be found simply by inspecting the home from the outside.

Myth: Considering that the consumer is the person who provides the funding to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.

Fact: Unless a lending agency releases its interest in the document, it is legally owned by the lending company that ordered the appraisal. However, consumers must be given a copy of the document upon written request, due to the Equal Credit Opportunity Act.

Myth: Consumers need not be concerned with what is in their appraisal so long as it satisfies the requirements of their lending company.

Fact: A consumer should definitely inspect their document; there might be some questions or some worries about the accuracy of the appraisal that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes a near perfect record for future reference, filled with useful 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 proximity.