Appraisal myths & facts

By law, an appraiser is required to be state-licensed to perform appraisals for federally-backed transactions. You have the ability to demand a copy of the completed appraisal report from your lender. Contact our professional staff if you have any concerns about the appraisal procedure.

Myth: The value that is ascertained by the appraiser will be equivalent to the market value.

Fact: While most states uphold the concept that assessed value approximates estimated market value, this often is not the case. Interior reconstruction that the assessor is not aware of and a lack of reassessment on nearby houses are exact examples of why the price can vary.

Myth: The opinion of value of a house will change depending upon whether the appraisal is provided for the buyer or the seller.

Fact: There is no real interest on the part of the appraiser in the outcome of the appraisal, therefore he will conduct his work with impartiality and independence, despite for whom the appraisal is conducted.

Myth: Any time market value is established, it should be the same as the replacement cost of the property.

Fact: Without any pressure from any different parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a particular property. If the property were rebuilt, the dollar amount required to do so would set the replacement cost.

Myth: There are specific ways that appraisers use to find the opinion of value of a home, like the price per square foot.

Fact: An appraisal is an amalgamation of data concluded from the house's size, location, proximity to specific facilities, the condition of the house and the price of recent comparable sales. You can count on Herrin Appraisal Company's staff to be honest in assessing this information.

Myth: In a robust economy - when the worth of properties in a given area are reported to be increasing by a certain percentage - the costs of individual properties in the area can be expected to increase by that same percentage.

Fact: Price appreciation of a specific house is always concluded on a case-by-case basis, factoring in information on comparable properties and other relevant specifications within the property itself. This is true in good economic times as well as poor.

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Myth: Just examining what the home looks like on the outside gives an idea of its worth.

Fact: House worth is concluded by a multitude of variables, including - but not limited to - location, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from just looking at the property from the outside.

Myth: Because consumers pay for appraisal reports when applying for loans to buy or refinance real estate, they own their appraisal report.

Fact: The document is, in fact, legally owned by the lending agency - unless the lender "relinquishes its interest" in the report. However, consumers have to be given a copy of the report upon written request, due to the Equal Credit Opportunity Act.

Myth: It doesn't mean anything to consumers what's in the appraisal report so long as it meets the needs of their lender.

Fact: It is almost imperative for consumers to read a copy of their report so that they can verify the accuracy of the report, in case they need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can serve as a record for the future, as it contains an exorbitant 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 vicinity.

Myth: Appraisers are hired only to assess home values in house sales involving mortgage-lending transactions.

Fact: Appraisers can have many varied qualifications and designations which allow them to provide a series of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.

Myth: An appraisal is no different than a home inspection report.

Fact: Appraisal reports are definitely not the same as a home inspection report. The point of an appraisal is to conclude upon an opinion of fair market value during the appraisal process and the completion of the appraisal. The task of a home inspector is to find the condition of the property and its main components, then write a report on these inspection.

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