Appraisal myths & facts

It is required by law that an appraiser must be state-licensed to perform appraisals for federally-related property sales in California. You also have the right to request a copy of the completed appraisal from your lending agency. Contact our professional staff if you have any questions about the appraisal procedure.

Myth: The value that is ascertained by the appraiser should be the same as the market value.

Fact: While most states uphold the suggestion that assessed value approximates estimated market value, this commonly is not the case. Interior reconstruction that the assessor is not aware of and a lack of reassessment on nearby houses are excellent examples of why this occurs.

Myth: Depending on whether the appraisal is drawn up for the buyer or the seller, the opinion of value of the property will vary.

Fact: The appraised value of the home does not affect the pay of the appraiser; as a result, the appraiser has no vested interest in the worth of the home. This means that he will conduct job with impartiality and objectivity regardless for whom the appraisal is created.

Myth: Any time market value is found, it should equal the replacement cost of the home.

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

Myth: Certain formulae, such as the price per square foot of the property, are the methods appraisers use to determine the price of a property.

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

Myth: When the economy is doing well and the sales prices of homes are found to be appreciating by a certain percentage, the other houses in the vicinity can be expected to appreciate based on that same percentage.

Fact: Worth appreciation of a specific property must be concluded on a case-by-case basis, factoring in data on comparable properties and other relevant specifications within the home itself. It doesn't matter if the economy is on the rise or declining.

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

Fact: Home worth is concluded by a multitude of variables, including location, condition, improvements, amenities, and market trends. As you can see, none of these factors can be found just by inspecting the home from the outside.

Myth: Because the consumer is the party who provides 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 report is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the report. Consumers have to be supplied with a version of the document through request due to the Equal Credit Opportunity Act.

Myth: Consumers need not care about what is in their appraisal report so long as it exceeds the needs of their lending company.

Fact: A consumer should definitely inspect their appraisal; there will probably be some questions or some concerns with the accuracy of the inspection that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes an excellent record for future reference, containing helpful and often-revealing data - 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 proximity.