Appraisal myths & facts

Legally, a real estate appraiser has to be state certified to perform legitimate real estate appraisals for federally-supported purchase. You are also entitled by law to receive a copy of the completed report from your lender. Contact CAA Real Property Services if you have any questions about the appraisal process.

Myth: The value that is ascertained by the appraiser is required to be exactly the same as the market value.

Fact: While most states back the suggestion that assessed value is the same as estimated market value, this usually is not the case. Generally when interior remodeling has occurred and the assessor is unaware of the improvement or properties in the area have not been reassessed for years or more, it may vary wildly.

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

Fact: The appraiser has no vested interest in the result of the appraisal report and should complete his job with independence, objectivity and impartiality - no matter for whom the appraisal is written.

Myth: Any time market value is established, it should equate to the replacement cost of the house.

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

Myth: Appraisers use a formula, like a certain price per square foot, to come to the cost of a house.

Fact: An appraisal report is an amalgamation of information based on the property's size, location, proximity to specific facilities, the condition of the house and the value of recent comparable sales. You can depend on CAA Real Property Services, Inc.'s appraisers to be ethical in assessing this information.

Myth: When the economy is robust and the cost of homes are reported to be appreciating by a certain percentage, the other homes in the proximity can be expected to appreciate based on that same percentage.

Fact: All appreciation of worth is on an individual basis, concluded by information on relevant considerations and the data of comparable properties. It makes no difference if the economy is robust or on the decline.

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

Fact: To conclude an accurate worth beyond all doubt, an appraiser must examine the house on a variety of factors based on location, condition, improvements, amenities, and market trends. As you can see, none of these factors can be found just by looking at the house from the exterior.

Myth: Because the consumer is the one who puts up the capital to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal report is theirs.

Fact: The appraisal is, in fact, legally owned by the lending agency - unless the lender "relinquishes its interest" in the appraisal. Due the Equal Credit Opportunity Act, any consumer asking for a copy of the appraisal report must be given one by their lending agency.

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

Fact: Only if home buyers look at a copy of their appraisal can they verify 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 incredible 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.