Appraisal myths & facts
Legally, an appraiser must be state certified to create substantiated real estate appraisals for federally-related transactions. You have the ability to request a copy of the finished report from your lending agency. 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: It is possible that Washington, like most states, validates the idea that the assessed value is no different from the market value; however, this certainly varies based on state-to-state. Often when interior remodeling has been done and the assessor is not aware of the improvement or other homes in the area have not been reassessed for quite some time, it may vary wildly.
Myth: Depending on whether the appraisal is written for the buyer or the seller, the cost of the property will vary.
Fact: The appraiser has no personal interest in the result of the appraisal and should conduct his job with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Market value will be the same as replacement cost.
Fact: Without any influence from any different parties to buy or sell, market value is what a willing buyer would pay a willing seller for a particular house. If the house were rebuilt, the dollar amount needed to do so would make up the replacement cost.
Myth: Appraisers use a formula, like a certain price per square foot, to arrive at the cost of a property.
Fact: Appraisers make a full analysis of all factors pertaining to the cost of a property, including its location, condition, size, proximity to facilities and recent values of comparable properties.
Myth: In a strong economy - when the values of homes in a given neighborhood are found to be increasing by a particular percentage - the costs of individual homes in the vicinity can be expected to rise by that same percentage.
Fact: All increase of value is on an individual basis, determined by data on relevant conditions and the data of comparable homes. This is true in strong economic times as well as bad.
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Myth: You can generally tell what a property is worth simply by looking at the outside.
Fact: To find an accurate value beyond all doubt, an appraiser must inspect the house on a variety of factors based on area, condition, improvements, amenities, and current market trends. An exterior inspection obviously can't provide all of the information needed.
Myth: Considering that the consumer is the one who puts up the capital to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report is theirs.
Fact: The report is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the appraisal. However, consumers must be supplied with a copy of the document upon written request, due to the Equal Credit Opportunity Act.
Myth: It doesn't concern consumers what's in the report so long as it satisfies the requirements of their lending company.
Fact: It is almost imperative for consumers to peruse a copy of their appraisal report so that they can verify the accuracy of the report, in case it's required to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes a valuable record for future reference, comprised of helpful and often-revealing information - 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 area.
Myth: The only reason someone would order an appraisal is if a home needs its cost assessed in a lender-based sales transaction.
Fact: Appraisers can have many different qualifications and designations which allow them to perform a lot 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: There's no need to get an appraisal if you order a home inspection.
Fact: Appraisal reports are definitely not the same as a home inspection. An appraiser decides upon an opinion of value in the appraisal process and resulting appraisal report. House inspectors will create a report that will determine the condition of the home and its major components and possible damage.