Common myths about appraising

It is enforced by the government that an appraiser needs to be state-licensed to create appraisal reports for federally-related property sales in California. You also have the right to acquire a copy of the completed appraisal report from your lender. Contact our professional staff if you have any concerns about the appraisal process.

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

Fact: While most states uphold the concept that assessed value equates estimated market value, this usually is not the case. Generally when interior remodeling has been done and the assessor is has not investigated the improvement or other houses in the neighborhood have not been reassessed for a good length of time, it may vary wildly.

Myth: The buyer or the seller can have some pull in the value of the property depending upon for whom the appraiser is working.

Fact: The cost of the property does not affect the pay of the appraiser; as such, the appraiser has no preconceived interest in the cost of the house. This means that he will provide job with impartiality and independence regardless for whom the appraisal is provided.

Myth: Market value will equal replacement cost.

Fact: Market value is based on what a willing buyer would be interested in paying a willing seller for a particular home, with neither being under undue influence to buy or sell. If the property were reconstructed, the dollar amount needed to do so would be the replacement cost.

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

Fact: Appraisers complete a full analysis of all factors pertaining to the cost of a home, including its location, condition, size, proximity to facilities and recent worth of comparable homes.

Myth: As houses increase their worth by a specific percentage - in a robust economic state - the properties within the same neighborhood are figured to increase by the same amount.

Fact: All increase of value is on a one-on-one basis, determined by information on relevant elements and the data of comparable homes. It doesn't matter if the economy is doing well or declining.

Myth: Just examining what the home looks like on its exterior gives an excellent idea of its cost.

Fact: To determine an accurate value beyond all doubt, an appraiser must assess the home on a variety of factors based on area, condition, improvements, amenities, and market trends. Obviously, none of these factors can be derived just by examining the house from the exterior.

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

Fact: Legally, the appraisal report is owned by the lending company unless the lender relinquishes their interest in the appraisal. Home buyers have to be given a version of the document through request due to the Equal Credit Opportunity Act.

Myth: Home buyers need not worry about what is in their appraisal report so long as it exceeds the necessities of their lending institution.

Fact: It is very important for consumers to read a copy of their appraisal report so that they can verify the accuracy of the report, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can double as a record for the future, since it contains 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 area.