Some Myths and Realities About
Real Estate Appraisals and Appraisers

Myth: Assessed value should equate to market value.
Reality: While most states support the concept that assessed value approximate estimated market value, this often is not the case. In California under prop.13 a property is usually reassessed when it sells or has certain other improvements

Myth: The appraised value of a property will vary, depending upon whether the appraisal is conducted for the buyer or the seller.
Reality: The appraiser has no vested interest in the outcome of the appraisal and should render services with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.

Myth: Market value should approximate replacement cost.
Reality: Market value is based on what a willing buyer likely would pay a willing seller for a particular property, with neither being under pressure to buy or sell. Replacement cost is the dollar amount required to reconstruct a property in-kind.

Myth: Appraisers use a formula, such as a specific price per square foot, to figure out the value of a home.
Reality: Appraisers make a detailed analysis of all factors pertaining to the value of a home including its location, condition, size, proximity to facilities and recent sale prices of comparable properties. A straight price per square foot appraisal would be very deceiving as it cannot account for the individual attributes of the properties.

Myth: In a robust economy - when the sales prices of homes in a given area are reported to be rising by a particular percentage - the value of individual properties in the area can be expected to appreciate by that same percentage.
Reality: Value appreciation of a specific property must be determined on an individualized basis, factoring in data on comparable properties and other relevant considerations. This is true in good times as well as bad.

Myth: You generally can tell what a property is worth simply by looking at the outside.
Reality: Property value is determined by a number of factors, including location, condition, improvements, amenities, and market trends. A much more accurate appraisal is given the more information an appraiser has, so an exterior appraisal can be performed depending on the level of need; but an interior inspection adds confidence and accuracy to the report.

Myth: Because consumers pay for appraisals when applying for loans to purchase or refinance real estate, they own their appraisal.
Reality: The appraisal is, in fact, legally owned by the lender; however, consumers must be given a copy of the appraisal report, upon written request, under the Equal Credit Opportunity Act.

Myth: Consumers need not be concerned with what is in the appraisal document so long as it satisfies the needs of their lending institution.
Reality: Only if consumers read a copy of their appraisal can they double-check its accuracy and question the result. Also, it makes a valuable record for future reference, containing useful 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 vicinity.

Myth: Appraisers are hired only to estimate real estate property values in property sales involving mortgage-lending transactions.
Reality: Depending upon their qualifications and designations, appraisers can and do provide a variety of services, including advice for estate planning, marriage dissolution, bankruptcy, dispute resolution, zoning and tax assessment review and cost/benefit analysis.

Myth: An Appraisal is the same as a home inspection.
Reality: An Appraisal does not serve the same purpose as an inspection. The Appraiser forms an opinion of value in the Appraisal process and resulting report. A home inspector determines the condition of the home and its major components and reports these findings.

Myth: an Appraisal is an Appraisal and I should be allowed to take it to any lender I decide to go through.  
Reality: The truth is that under the USPAP laws the transferring of appraisals is not legal. It violates the ethics and confidentiality rules.

Myth: predatory lending happens to poor people or uneducated people only.
Reality: this is not true; it can happen to anybody and the best way to fight it is knowledge. This website provides information and hints on how to detect it and fight it. http://realtytimes.com/rtnews/rtcpages/20000911_predatory1.htm

Myth: My real estate agent can give me a value for my property; why do I need an appraisal by a licensed appraiser?  
Reality: While most agents are very good at giving you a value keep in mind they want your listing which may skew their view on your house. An appraiser is an unbiased opinion that has no stake in the outcome and therefore can be fair to all. 
 
Myth: My agent says that I should get an appraisal prior to listing the house; I think he is just lazy.
Reality: Your agent is wise for a couple of reasons. One a house with a proven value by a licensed appraiser is easier to sell. Two many lawsuits come from misleading information from the seller such as living area and lot sizes. An appraiser will accurately measure the house as part of the report and provide a plat map that shows the lot size. We offer pre-listing appraisals and sketch reports for such reasons.