Appraisal myths & facts

It is enforced by law that a real estate appraiser is required to be state-licensed to offer appraisals for federally-supported home transactions in California. The law entitles you to get a copy of your completed report from your lending agency after it has been provided. Contact our professional staff if you have any concerns about the appraisal process.

Myth: Assessed value should be similar to to market value.

Fact: This is not often the case; most states do support the concept that the assessed value is the same as market value, but not always. Interior reconstruction that the assessor is not aware of and a dearth of reassessment on nearby properties are perfect examples of why there might be a differential in price.

Myth: Depending on if the appraisal is written for the buyer or the seller, the opinion of value of the home will vary.

Fact: The price of the home does not affect the payment of the appraiser; because of this, the appraiser has no personal interest in the worth of the house. This means that he will conduct business with impartiality and objectivity regardless for whom the appraisal is provided.

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

Fact: Market value is derived from what a willing buyer would likely pay a willing seller for a certain home, with neither being under duress to buy or sell. If the house were rebuilt, the dollar amount needed to do so would make up the replacement cost.

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

Fact: Appraisers complete an exhaustive analysis of all factors in consideration to the value of a property, including its location, condition, size, proximity to facilities and recent values of comparable properties.

Myth: In a powerful economy - when the prices of houses in a given county are reported to be rising by a particular percentage - the worth of individual houses in the vicinity can be expected to appreciate by that same percentage.

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

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

Fact: Property worth is determined by a multitude of factors, including location, condition, improvements, amenities, and market trends. An outside-only inspection certainly can't provide all of the information required.

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

Fact: Unless a lender releases its interest in the report, it is legally owned by the lending agency that purchased the appraisal. Under the Equal Credit Opportunity Act, any consumer asking for a copy of the document must be provided with it by their lending company.

Myth: Consumers need not be concerned with what is in their appraisal document so long as it exceeds the necessities of their lending agency.

Fact: A home buyer should definitely look through their appraisal report; there may be some questions or some worries about the accuracy of the appraisal that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can serve as a record for the future, since it contains an incredible amount of information - 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 vicinity.