Common myths about appraising

It is required by legal agencies that an appraiser needs to be state-licensed to write appraisal reports for federally-supported real estate transactions in California. The law entitles you to acquire a copy of your completed appraisal report from your lending agency after it has been produced. Contact us if you have any concerns about the appraisal procedure.

Myth: Assessed value should be the same as to market value.

Fact: It might be that California, like most states, validates the idea that the assessed value equals the market value; however, this is not often the case. Interior reconstruction that the assessor has not investigated and a dearth of reassessment on nearby properties are exact examples of why this occurs.

Myth: Depending on if the appraisal is written for the buyer or the seller, the cost of the property will vary.

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

Myth: Market value should equal replacement cost.

Fact: Without any pressure from any external parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific home. The dollar amount required to rebuild a property is what shows the replacement cost.

Myth: There are specific ways that real estate appraisers use to show the opinion of value of a house, like the price per square foot.

Fact: Appraisers complete a full analysis of all factors in consideration to the value of a property, including its location, condition, size, proximity to facilities and recent values of comparable houses.

Myth: As properties increase their worth by a certain percentage - in a strong economy - the homes in proximity are expected to appreciate by the same amount.

Fact: All appreciation of value is on a case-by-case basis, found by information on relevant considerations and the data of comparable properties. This is true in good economic times as well as poor.

Myth: Just looking at what the property looks like on the outside gives a good idea of its cost.

Fact: There are a number of different variables that conclude the value of a home; these factors include location, condition, improvements, amenities, and market trends. An external inspection obviously can't provide all of the information required.

Myth: Because the consumer is the party who puts up the capital to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal belongs to them.

Fact: The document is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the appraisal. Consumers have to be given a version of the appraisal report through request due to the Equal Credit Opportunity Act.

Myth: It doesn't concern consumers what's in the report so long as it meets the needs of their lending agency.

Fact: Only if consumers read a copy of their appraisal can they verify its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes an excellent record for future reference, containing helpful and often-revealing data - 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.