Appraisal myths debunked

Legally, an appraiser needs to be state certified to perform substantiated real estate appraisals for federally-related sales. The law entitles you to receive a copy of your completed appraisal report from your lending agency after it has been provided. Contact our professional staff if you have any concerns about the appraisal procedure.

Myth: Market value has to be the same as the assessed value of the property.

Fact: It is probable that Colorado, like most states, supports the common myth that the assessed value is the same as the market value; however, this is not often the case. Interior remodeling that the assessor is unaware of and a lack of reassessment on nearby houses are perfect examples of why this occurs.

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

Fact: The appraised value of the house does not affect the payment of the appraiser; as such, the appraiser has no pressured interest in the cost of the property. Obviously, he will complete his services with impartiality and independence regardless for whom the appraisal is provided.

Myth: Market value should be the same as replacement cost.

Fact: The way market value is derived is based on what a home buyer would likely pay a willing seller for a house without being under influence from any outside party to purchase or sell. If the home were rebuilt, the dollar amount required to do so would set the replacement cost.

Myth: There are certain methods that real estate appraisers use to determine the value of a property, like the price per square foot.

Fact: There are many different ways that an appraiser will use to make a full analysis of every factor in consideration of the home, such as the size, location, condition, how close it is to certain facilities and the worth of recently sold comparable houses.

Myth: In a powerful economy - when the values of homes in a given neighborhood are reported to be rising by a particular percentage - the prices of individual properties in the proximity can be expected to rise by that same percentage.

Fact: All appreciation of price is on a case-by-case basis, found by data on relevant conditions and the data of comparable properties. It doesn't matter if the economy is on the rise or declining.

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

Fact: To find an accurate price beyond all doubt, an appraiser must examine the house on a variety of factors based on area, condition, improvements, amenities, and market trends. As you can see, none of these variables can be derived simply by looking at the house from the outside.

Myth: Because consumers fund appraisal reports when applying for loans to purchase or refinance their home, they legally own their appraisal.

Fact: Unless a lender releases its interest in the appraisal report, it is legally owned by the lending company that ordered the appraisal. Because of the Equal Credit Opportunity Act, any consumer demanding a copy of the appraisal report must be provided with one by their lending company.

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

Fact: It is a very good idea for home buyers to peruse a copy of their appraisal report so that they can double-check the accuracy of the document, in case there is a need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes an excellent record for future reference, comprised of useful and often-revealing data - including, but not limited to, 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.