Appraisal myths & facts

By law, an appraiser is enforced to be state-licensed to perform appraisals for federally-related purchases. The law gives you the right to receive a copy of your finished appraisal from your lender after it has been provided. Contact Iris Appraisal if you have any concerns about the appraisal process.

Myth: Assessed value should always be equal to market value.

Fact: While most states uphold the suggestion that assessed value equates estimated market value, this commonly is not the case. Examples include when interior remodeling has occurred and the assessor has not seen the improvements, or when houses in the area have not been reassessed for an prolonged period.

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

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 created.

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

Fact: Market value is acquired by what a willing buyer would likely pay a willing seller for a specific property, with neither being under undue influence to buy or sell. The dollar amount needed to rebuild a house is what constitutes the replacement cost.

Myth: There are specific methods that appraisers use to find the opinion of value of a property, such as the price per square foot.

Fact: There are many differing processes 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 sales price of recently sold comparable properties.

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

Fact: Any cost at which an appraiser arrives in regards to a specific house is always personalized, based on certain factors derived from the data of comparable houses and other considerations within the home itself. It doesn't matter if the economy is doing well or declining.

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

Fact: There are a number of different variables that determine property value; these factors include location, condition, improvements, amenities, and market trends. An exterior inspection definitely can't provide all of the data required.

Myth: Since the consumer is the party who puts up the funding to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal report belongs to them.

Fact: Legally, the document is owned by the lender unless the lender relinquishes their interest in the appraisal. However, consumers have to be provided with a copy of the report upon written request, because of the Equal Credit Opportunity Act.

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

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. An report can serve as a record for the future, containing an exorbitant amount of 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 proximity.