Common myths about appraising

Legally, an appraiser must be state certified to write substantiated real estate appraisals for federally-backed transactions. You also have the right to receive a copy of the finished appraisal report from your lending agency. Contact our professional staff if you have any concerns about the appraisal procedure.

Myth: Market value needs to be the same as the assessed value of the property.

Fact: It is probable that California, like most states, validates the common myth that the assessed value is the same as the market value; however, this is not often the case. Generally when interior remodeling has been done and the assessor is has not investigated the improvement or other houses in the area have not been reassessed for years or more, it may vary wildly.

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

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

Myth: Market value will be the same as replacement cost.

Fact: Without any influence from any external parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a specific property. If the property were reconstructed, the dollar amount required to do so would make up the replacement cost.

Myth: There are specific ways that real estate appraisers use to find the opinion of value of a home, such as the price per square foot.

Fact: There are many numerous methods that an appraiser will use to make a detailed analysis of every factor in consideration of the home, such as the size, location, condition, how close it is to certain facilities and the opinion of value of recently sold comparable houses.

Myth: As houses increase their worth by a certain percentage - in a robust economy - the homes nearby are expected to increase by the same amount.

Fact: Value appreciation of a certain property must be determined on a case-by-case basis, factoring in information on comparable homes and other relevant elements. It doesn't matter if the economy is doing well or declining.

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

Fact: There are a multitude of different factors that show property value; these factors include area, condition, improvements, amenities, and market trends. Obviously, none of these variables can be found just by examining the house from the outside.

Myth: Considering that the consumer is the person who puts up the money to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal is theirs.

Fact: Legally, the appraisal report is owned by the lending company unless the lender relinquishes their interest in the report. However, home buyers must be provided with a copy of the report upon written request, through the Equal Credit Opportunity Act.

Myth: There's no reason for home buyers to even worry about what the appraisal report contains so long as their lender is satisfied.

Fact: Only if home buyers look through a copy of their appraisal can they double-check 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, comprised of helpful 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 area.

Myth: There is no reason to order an appraisal unless you are trying to get an estimate of the cost of a home during a sales transaction involving a lending institution.

Fact: Appraisers can have many varied qualifications and designations which allow them to perform a variety of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.

Myth: An appraisal is the same as a home inspection.

Fact: A home inspection report has a completely different purpose than an appraisal. The function of an appraisal is to find an opinion of fair market value during the appraisal process and the completion of the appraisal. House inspectors will produce a report that will explain the condition of the house and its major components and possible damage.