Appraisal myths & facts

By law, an appraiser is required to be state-licensed to perform appraisals for federally-related purchases. You are also entitled by law to acquire a copy of the completed report from your lender. Contact our professional staff if you have any concerns about the appraisal process.

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

Fact: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. Often when interior remodeling has occurred and the assessor is unaware of the improvement or other homes in the area have not been reassessed for years or more, it may vary wildly.

Myth: Depending on whether the appraisal is ordered for the buyer or the seller, the value of the house will vary.

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

Myth: Any time market value is found, it should be similar to the replacement cost of the house.

Fact: Market value is acquired by what a willing buyer would be interested in paying a willing seller for a certain property, with neither being under undue influence to buy or sell. The dollar amount necessary to rebuild a home is what constitutes the replacement cost.

Myth: Appraisers use a calculation, like a certain price per square foot, to figure out the value of a house.

Fact: There are many numerous methods that an appraiser will use to make a comprehensive analysis of every factor pertaining to the property, such as the size, location, condition, how close it is to undesirable facilities and the worth of recently sold comparable homes.

Myth: In a robust economy - when the worth of homes in a given region are found to be increasing by a certain percentage - the prices of individual houses in the proximity can be expected to appreciate by that same percentage.

Fact: Cost increase of a specific home is always determined on an individualized basis, factoring in information on comparable houses and other relevant elements. This is true in fair economic times as well as poor.

Myth: Just seeing what the home looks like on its exterior gives a good idea of its cost.

Fact: To find an accurate value beyond all doubt, an appraiser must inspect the property on a variety of factors based on location, condition, improvements, amenities, and market trends. Obviously, none of these variables can be derived just by inspecting the property from the exterior.

Myth: Because consumers pay for the appraisal when applying for loans to purchase or refinance their house, they legally own their appraisal report.

Fact: Legally, the report is owned by the lending agency unless the lender relinquishes their interest in the report. However, consumers must be given a copy of the appraisal upon written request, due to the Equal Credit Opportunity Act.

Myth: There's no need for consumers to even care about what the appraisal contains so long as their lending company is satisfied.

Fact: It is very important for consumers to check over a copy of their appraisal report so that they can double-check the accuracy of the document, in case they need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes a valuable record for future reference, comprised of helpful and often-revealing data - 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 area.