Common myths about appraising

By law, an appraiser needs to be state-licensed to offer appraisals for federally-supported sales. You are also entitled by law to demand a copy of the finished report from your lender. Contact us if you have any questions about the appraisal process.

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

Fact: While most states back the idea that assessed value equates estimated market value, this commonly is not the case. Interior reconstruction that the assessor is unaware of and a dearth of reassessment on nearby properties are prime examples of why there might be a differential in price.

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

Fact: The appraiser has no personal interest in the result of the appraisal and should complete his task with independence, objectivity and impartiality - no matter for whom the appraisal is provided.

Myth: Market value will be the same as replacement cost.

Fact: Without any pressure from any different parties to buy or sell, market value is what a willing buyer would pay a willing seller for a particular property. The dollar amount demanded to reconstruct a house is what shows the replacement cost.

Myth: Appraisers use a calculation, such as a certain price per square foot, to figure out the worth of a property.

Fact: An appraisal report is an amalgamation of information based on the home's size, location, proximity to undesirable facilities, the condition of the home and the worth of recent comparable sales. You can rely on South Shore Realty Advisors, Inc's staff to be forthright in assessing this information.

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

Fact: Worth increase of a specific house is always concluded on an individualized basis, factoring in information on comparable houses and other relevant considerations. It makes no difference if the economy is good or bad.

Myth: The home's outside is determinate of the actual value of the house; it is unnecessary to do an interior inspection.

Fact: To find an accurate value beyond all doubt, an appraiser must inspect the home on a variety of factors based on area, condition, improvements, amenities, and market trends. An exterior inspection definitely can't provide all of the data needed.

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

Fact: The appraisal report is, in fact, legally owned by the lender - unless the lender "releases its interest" in the appraisal. However, home buyers must be given a copy of the appraisal report upon written request, through the Equal Credit Opportunity Act.

Myth: There's no need for home buyers to even concern themselves with what the appraisal report contains so long as their lending institution is satisfied.

Fact: It is a very good idea for home buyers to peruse a copy of their report so that they can double-check the accuracy of the document, in case they need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes an excellent record for future reference, filled with helpful and often-revealing information - including 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 vicinity.