Common myths about appraising

It is required by the government that a real estate appraiser needs to be state-licensed to offer appraisal reports for federally-supported property transactions in California. You have the ability to request a copy of the completed appraisal from your lending agency. Contact our professional staff if you have any concerns about the appraisal procedure.

Myth: The value that is ascertained by the appraiser must be exactly the same as the market value.

Fact: It could be that California, like most states, supports the suggestion that the assessed value is the same as the market value; however, this is not always true. Examples include when interior remodeling has occurred and the assessor does not know about the improvements, or when properties in the area have not been reassessed for an extended time.

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

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

Myth: Any time market value is found, it should equate to the replacement cost of the house.

Fact: Market value is arrived at through what a willing buyer would be interested in paying a willing seller for a certain house, with neither being under undue influence to buy or sell. The replacement cost is the dollar amount necessary to rebuild a home in-kind.

Myth: Appraisers use a formula, like a specific price per square foot, to conclude the worth of a property.

Fact: There are many numerous calculations that an appraiser will use to make a full analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to specific facilities and the worth of recently sold comparable properties.

Myth: As houses increase their worth by a certain percentage - in a strong economic state - the properties around the appreciating properties are figured to appreciate by the same amount.

Fact: All increase of value is on a case-by-case basis, found by information on relevant conditions and the data of comparable houses. This is true in fair economic times as well as bad.

Myth: You can generally find what a home is worth simply by looking at the exterior.

Fact: House value is determined by a multitude of variables, including - but not limited to - area, condition, improvements, amenities, and market trends. As you can see, none of these variables can be found simply by examining the home from the exterior.

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

Fact: Legally, the appraisal is owned by the lender unless the lender relinquishes their interest in the appraisal. Consumers must be supplied with a copy of the appraisal report through request because of the Equal Credit Opportunity Act.

Myth: There's no point for consumers to even worry about what the report contains so long as their lending company is satisfied.

Fact: It is a very good idea for consumers to read a copy of their appraisal so that they can double-check 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. Also, the appraisal makes an invaluable record for future reference, containing useful 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 proximity.