Appraisal myths & facts

It is enforced by the government that an appraiser must be state-licensed to produce appraisal reports for federally-supported home purchases in California. The law gives you the right to receive a copy of your completed appraisal from your lender after it has been produced. Contact us if you have any concerns about the appraisal process.

Myth: The value that is ascertained by the appraiser is required to be exactly the same as the market value.

Fact: While most states back the idea that assessed value is the same as estimated market value, this often is not the case. Examples include when interior remodeling has occurred and the assessor has not seen the improvements, or when properties in the vicinity have not been reassessed for an prolonged period of time.

Myth: The appraised value of a home will be different depending upon whether the appraisal is ordered for the buyer or the seller.

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

Myth: Market value will equate to replacement cost.

Fact: Without any influence from any external parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a specific house. The dollar amount needed to reconstruct a property is what constitutes the replacement cost.

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

Fact: There are many varied methods that an appraiser will use to make an in-depth analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to undesirable facilities and the value of recently sold comparable homes.

Myth: As homes increase their worth by a specific percentage - in a robust economy - the properties within the same neighborhood are expected to increase by the same amount.

Fact: Any price at which an appraiser concludes in regards to a specific home is always individualized, based on certain factors derived from the information of comparable houses and other specifications within the home itself. It makes no difference whether the economy is powerful or poor.

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

Fact: To conclude an accurate worth beyond all doubt, an appraiser must examine the property on a variety of factors based on area, condition, improvements, amenities, and market trends. An outside-only inspection definitely can't provide all of the data required.

Myth: Because the consumer is the one who provides the capital to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal report is theirs.

Fact: Legally, the document is owned by the lending agency unless the lender relinquishes their interest in the document. By the Equal Credit Opportunity Act, any home buyer asking for a copy of the report must be given one by their lender.

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

Fact: It is very important for home buyers to look at 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 great deal of information stored in an appraisal that will probably 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 proximity.