Appraisal myths debunked

By law, an appraiser is required to be state-licensed to perform appraisals for federally-related sales. The law entitles you to receive a copy of your completed report from your lender after it has been provided. Contact our professional staff if you have any concerns about the appraisal process.

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

Fact: While most states uphold the idea that assessed value is the same as estimated market value, this often is not the case. Interior remodeling that the assessor has not investigated and a lack of reassessment on nearby properties are excellent examples of why this occurs.

Myth: The opinion of value of a property will vary depending upon whether the appraisal is ordered for the buyer or the seller.

Fact: The appraiser has no personal interest in the outcome of the appraisal and should conduct services with independence, objectivity and impartiality - no matter for whom the appraisal is provided.

Fact: The way market value is found is based on what a buyer would likely pay a willing seller for a property without being under duress from any outside group to buy or sell. The replacement cost is the dollar amount necessary to reconstruct a house in-kind.

Myth: Appraisers use a calculation, like a specific price per square foot, to come to the cost of a property.

Fact: There are many different processes that an appraiser will use to make a comprehensive analysis of every factor pertaining to the property, such as the size, location, condition, how close it is to undesirable facilities and the value of recently sold comparable properties.

Myth: When the economy is doing well and the cost of properties are reported to be rising by a certain percentage, the other houses in the area can be expected to increase based on that same percentage.

Fact: Any value at which an appraiser arrives concerning a certain property is always personalized, based on certain factors pulled from the data of comparable properties and other considerations within the subject property itself. This is true in excellent economic times as well as bad.

Myth: Just looking at what the property looks like on the outside gives an idea of its value.

Fact: Value is determined by a multitude of factors, including area, condition, improvements, amenities, and market trends. 

Myth: Since you're the one coughing up the cash for the appraisal report when applying for your loan to purchase or refinance your property, you own the produced appraisal report.

Fact: USPAP defines the client as the entity that orders the appraisal report. If a lending agency orders the appraisal report, unless the lending agency releases its interest in the report, it is legally owned by the lending agency. Confidentiality prohibits Thompson Appraisal & Consulting from disclosing the conclusions to third-parties. Property owners must be supplied with a copy of the report through request as per the Equal Credit Opportunity Act.

Myth: There's no need for consumers to even worry about what the appraisal report contains so long as their lending company is fine with the contents therein.

Fact: It is almost imperative for buyers to check over a copy of their report so that they can verify the accuracy of the document, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of data contained in an report that will probably be useful to the buyer in the future, such as 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.