Appraisal myths debunked

It is enforced by law that a real estate appraiser is required to be state-licensed to offer appraisal reports for federally-supported property purchases in California. Also by law, you have the right to receive a copy of the finished report from your lending agency. Contact us if you have any questions about the appraisal procedure.

Myth: The value that is assessed by the appraiser should be equivalent to the market value.

Fact: While most states back the idea that assessed value approximates estimated market value, this generally is not the case. Interior remodeling that the assessor has not investigated and a lack of reassessment on nearby houses are prime examples of why there might be a differential in price.

Myth: Depending on if the appraisal is ordered for the buyer or the seller, the opinion of value of the property will vary.

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

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

Fact: Without any influence from any different parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific home. The dollar amount demanded to reconstruct a property is what shows the replacement cost.

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

Fact: There are many different ways that an appraiser will use to make a detailed investigation of every factor pertaining to the house, such as the size, location, condition, how close it is to certain facilities and the cost of recently sold comparable properties.

Myth: As properties appreciate by a certain percentage - in a robust economy - the properties nearby are expected to appreciate by the same amount.

Fact: All increase of value is on a case-by-case basis, found by data on relevant elements and the data of comparable homes. This is true in excellent economic times as well as bad.

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

Fact: There are a multitude of different factors that conclude the value of a home; these factors include area, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from just looking at the property from the outside.

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

Fact: The appraisal is, in fact, legally owned by the lending company - unless the lender "relinquishes its interest" in the document. Home buyers have to be given a version of the appraisal report through request due to the Equal Credit Opportunity Act.

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

Fact: It is very important for home buyers to go through a copy of their appraisal report so that they can verify the accuracy of the report, in case they need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can serve as a record for the future, as it contains an incredible amount of data - including, but certainly 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 proximity.