Appraisal myths & facts

It is required by the government that a real estate appraiser is required to be state-licensed to write appraisal reports for federally-supported property sales in California. Also by law, you are entitled to demand a copy of the finished appraisal report from your lender. Contact our professional staff if you have any questions about the appraisal procedure.

Myth: The value that is ascertained by the appraiser is required to be equivalent to the market value.

Fact: This is not often the case; most states do support the concept that the assessed value is the same as market value, but not always. Interior reconstruction that the assessor is unaware of and a dearth of reassessment on nearby houses are excellent examples of why this occurs.

Myth: Depending on whether the appraisal is done for the buyer or the seller, the opinion of value of the home will vary.

Fact: The value of the home does not affect the pay of the appraiser; because of this, the appraiser has no personal interest in the cost of the house. What this means is he will conduct job with impartiality and independence regardless for whom the appraisal is produced.

Myth: Market value will approximate replacement cost.

Fact: The way market value is derived is based on what a home buyer would likely pay a willing seller for a property without being under influence from any outside group to buy or sell. The dollar amount demanded to rebuild a house is what constitutes the replacement cost.

Myth: Specific methods, like the price per square foot, are what appraisers use to arrive at the cost of a home.

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

Myth: In a strong economy - when the values of homes in a given area are reported to be increasing by a particular percentage - the worth of individual houses in the area can be expected to appreciate by that same percentage.

Fact: Any cost at which an appraiser concludes in regards to a certain house is always individualized, based on certain factors found from the data of comparable properties and other considerations within the home itself. It makes no difference whether the economy is strong or bad.

Myth: The house's exterior is determinate of the actual value of the property; it is unnecessary to do an interior appraisal.

Fact: To determine an accurate price beyond all doubt, an appraiser must inspect the house on a variety of factors based on location, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from just inspecting the house from the exterior.

Myth: Since you're the one paying for the appraisal report when applying for the loan to purchase or refinance your house, you own the provided appraisal.

Fact: The appraisal report is, in fact, legally owned by the lending agency - unless the lender "relinquishes its interest" in the report. However, home buyers have to be given a copy of the document upon written request, under the Equal Credit Opportunity Act.

Myth: It doesn't matter to consumers what's in the appraisal report so long as it satisfies the needs of their lending agency.

Fact: Only if consumers examine a copy of their appraisal report 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 appraisal can double as a record for the future, since it contains a great deal of information - 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.