Common myths about appraising

It is enforced by legal agencies that an appraiser is required to be state-licensed to produce appraisal reports for federally-supported home sales in California. The law gives you the right to acquire a copy of your completed appraisal from your lending agency after it has been provided. Contact our professional staff if you have any concerns about the appraisal procedure.

Myth: The value that is assessed by the appraiser will be the same as the market value.

Fact: This usually isn't true; most states do support the idea that the assessed value is the same as market value, but not always. Examples include when interior remodeling has occurred and the assessor does not know about the improvements, or when properties in the area have not been reassessed for an extended time.

Myth: The buyer or the seller often will have some pull in the value of the property depending upon for whom the appraiser is working.

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

Myth: Market value should equal replacement cost.

Fact: The way market value is derived is based on what a buyer would likely pay a willing seller for a house without being under duress from any external party to buy or sell. The replacement cost is the dollar amount needed to rebuild a house in-kind.

Myth: Appraisers use a formula, like a specific price per square foot, to come to the cost of a house.

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

Myth: As houses appreciate by a specific percentage - in a robust economy - the houses nearby are figured to appreciate by the same amount.

Fact: All appreciation of worth is on a case-by-case basis, concluded by information on relevant considerations and the data of comparable houses. It doesn't matter if the economy is doing well or declining.

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

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

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

Fact: Legally, the report is owned by the lender unless the lender relinquishes their interest in the document. Under the Equal Credit Opportunity Act, any consumer demanding a copy of the report must be provided with it by their lending agency.

Myth: There's no reason for consumers to even concern themselves with what the report contains so long as their lender is fine with the contents therein.

Fact: It is a very good idea for consumers to check over a copy of their appraisal report so that they can verify the accuracy of the report, in case it's required to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of information contained in an appraisal that should 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 region.