Appraisal myths & facts

It is mandated by the government that a real estate appraiser is required to be state-licensed to write appraisal reports for federally-supported real estate transactions in California. Also by law, you are entitled to request a copy of the finished report from your lender. Contact us if you have any questions about the appraisal process.

Myth: Assessed value generally will 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 remodeling that the assessor is not aware of and a dearth of reassessment on nearby properties are excellent examples of why this occurs.

Myth: The appraised value of a home will differ depending upon whether the appraisal is ordered for the buyer or the seller.

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

Myth: Market value will equate to replacement cost.

Fact: Without any suggestion from any outside parties to buy or sell, market value is what a willing buyer would pay a willing seller for a particular home. The replacement cost is the dollar amount necessary to reconstruct a home in-kind.

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

Fact: There are many varied ways that an appraiser will use to make an in-depth investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to certain facilities and the cost of recently sold comparable houses.

Myth: As houses appreciate by a specific percentage - in a robust economic state - the properties nearby are figured to appreciate by the same amount.

Fact: Any worth at which an appraiser concludes concerning a specific property is always individualized, based on certain factors pulled from the data of comparable homes and other considerations within the property itself. It makes no difference whether the economy is excellent or poor.

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

Fact: There are a multitude of different variables that determine the value of a home; these factors include location, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from simply examining the home from the exterior.

Myth: Because consumers fund appraisals when applying for loans to buy or refinance their home, they own their appraisal report.

Fact: Legally, the report is owned by the lender unless the lender releases their interest in the report. However, home buyers must be provided with a copy of the document upon written request, under the Equal Credit Opportunity Act.

Myth: Consumers need not care about what is in their document so long as it satisfies the requirements of their lending institution.

Fact: It is almost imperative for home buyers to check over a copy of their report so that they can verify the accuracy of the document, in case there is a need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can double as a record for the future, containing 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.