Appraisal myths debunked

By law, an appraiser must be state-licensed to produce appraisals for federally-backed transactions. Also by law, you are allowed to receive a copy of the finished appraisal from your lender. Contact us if you have any questions about the appraisal process.

Myth: Assessed value generally will be equal to market value.

Fact: It could be that Arizona, like most states, validates the common myth that the assessed value is no different from the market value; however, this is not always true. Examples include when interior reconstruction has occurred and the assessor has not seen the improvements, or when houses in the vicinity have not been reassessed for an extended time.

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

Fact: The price of the house does not affect the pay of the appraiser; due to this, the appraiser has no preconceived interest in the opinion of value of the home. Obviously, he will complete his services with impartiality and independence regardless for whom the appraisal is conducted.

Myth: The replacement cost of the home will be is on par with the market value.

Fact: Without any influence from any different parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a particular property. Replacement cost is the dollar amount needed to rebuild a home in-kind.

Myth: Appraisers use a formula, like a specific price per square foot, to arrive at the value of a house.

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

Myth: In a powerful economy - when the sales prices of properties in a given area are found to be rising by a certain percentage - the prices of individual properties in the vicinity can be expected to appreciate by that same percentage.

Fact: Price increase of a certain house has to be concluded on a case-by-case basis, factoring in data on comparable houses and other relevant elements. It doesn't matter if the economy is on the rise or declining.

Myth: Just seeing what the house looks like on the outside gives an idea of its value.

Fact: Home worth is determined by a number of variables, including - but not limited to - area, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from just inspecting the home from the exterior.

Myth: Since you're the one paying for the appraisal when applying for the loan to buy or refinance real estate, you own the ordered appraisal report.

Fact: Unless a lending agency releases its interest in the document, it is legally owned by the lending company that purchased the appraisal. However, home buyers have to be supplied with a copy of the document upon written request, through the Equal Credit Opportunity Act.

Myth: There's no need for consumers to even concern themselves with what the report contains so long as their lending company is fine with the contents therein.

Fact: A home buyer should definitely read through their report; there may be some questions or some worries about the accuracy of the appraisal report that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of data contained in an appraisal report that will probably be useful to the consumer in the future, such as 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.