Appraisal myths & facts

By law, an appraiser needs to be state-licensed to produce appraisals for federally-backed transactions. You are also entitled by law to receive a copy of the finished report from your lending agency. Contact Wulf Appraisal Corp. if you have any questions about the appraisal process.

Myth: The value that is ascertained by the appraiser must be the same as the market value.

Fact: While most states support the idea that assessed value approximates estimated market value, this often is not the case. Interior reconstruction that the assessor is not aware of and a dearth of reassessment on nearby homes are perfect examples of why there might be a differential in price.

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

Fact: The appraised value of the home does not affect the pay of the appraiser; because of this, the appraiser has no preconceived interest in the cost of the home. This means that he will complete his services with impartiality and objectivity regardless for whom the appraisal is produced.

Myth: Any time market value is found, it should equal the replacement cost of the home.

Fact: Market value is acquired by what a willing buyer would be interested in paying a willing seller for a specific property, with neither being under pressure to buy or sell. Replacement value is the dollar amount needed to reconstruct a home in-kind.

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

Fact: Appraisers make an exhaustive analysis of all factors pertaining to the price of a property, including its location, condition, size, proximity to facilities and recent sale prices of comparable properties.

Myth: As houses appreciate by a specific percentage - in a strong economic state - the houses around the appreciating properties are expected to increase by the same amount.

Fact: Cost increase of a specific house has to be concluded on a case-by-case basis, factoring in data on comparable properties and other relevant considerations. This is true in good economic times as well as bad.

Myth: You can commonly tell what a house is worth simply by looking at the exterior.

Fact: There are a number of different variables that show the value of a home; these factors include area, condition, improvements, amenities, and market trends. An exterior inspection definitely 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 belongs to them.

Fact: Legally, the document is owned by the lending agency unless the lender releases their interest in the report. However, home buyers must be supplied with a copy of the appraisal report upon written request, under the Equal Credit Opportunity Act.

Myth: Home buyers need not worry about what is in their document so long as it exceeds the requirements of their lending group.

Fact: Only if consumers examine a copy of their appraisal can they verify 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 appraisal makes a valuable record for future reference, filled with useful and often-revealing data - 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 vicinity.