Common myths about appraising

By law, an appraiser needs to be state-licensed to perform appraisals for federally-related purchases. Also by law, you are allowed to demand a copy of the finished appraisal from your lender. Contact us if you have any questions about the appraisal procedure.

Myth: Assessed value will always equate to market value.

Fact: This is not often the case; most states do support the suggestion that the assessed value is the same as market value, but not always. Often when interior remodeling has been done and the assessor is has not investigated the improvement or properties in the Oakland County have not been reassessed for years or more, it may vary wildly.

Myth: The buyer or the seller can have some pull in the cost of the house depending upon for whom the appraiser is working.

Fact: There is no real interest on the part of the appraiser in the result of the report, therefore he will complete his work with impartiality and independence, no matter for whom the appraisal is created.

Myth: The replacement cost of the house is always is on par with the market value.

Fact: Without any pressure from any outside parties to buy or sell, market value is what a willing buyer would pay a willing seller for a particular house. The dollar amount demanded to reconstruct a property is what constitutes the replacement cost.

Myth: There are specific methods that real estate appraisers use to find the cost of a property, such as the price per square foot.

Fact: An appraisal report is an assertion of information based on the property's size, location, proximity to undesirable facilities, the condition of the home and the price of recent comparable sales. You can depend on Community Appraisal's appraisers to be professional in assessing this information.

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

Fact: Cost appreciation of a specific house must be determined on an individualized basis, factoring in information on comparable properties and other relevant elements. It doesn't matter if the economy is on the rise or declining.

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Myth: Just examining what the home looks like on its exterior gives an excellent idea of its value.

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. An outside-only inspection definitely can't provide all of the information needed.

Myth: Since the consumer is the party who provides the capital to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal belongs to them.

Fact: Legally, the document is owned by the lender unless the lender relinquishes their interest in the appraisal. Under the Equal Credit Opportunity Act, any consumer asking for a copy of the document must be provided with one by their lender.

Myth: There's no need for consumers to even concern themselves with what the report contains so long as their lender is fine with the contents therein.

Fact: A consumer should definitely look through their document; there might be some questions or some worries with the accuracy of the appraisal report that should be addressed. 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 consumer 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 proximity.

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

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

Myth: A house inspection serves the same purpose as an appraisal.

Fact: An appraisal report does not fulfill the same purpose as an inspection report. The job of the appraiser is to find an opinion of value in the appraisal process and through creating the report. The job of a home inspector is to assess the condition of the house and its major components, then produce a report on these findings.