Common myths about appraising

By law, an appraiser is enforced to be state-licensed to offer appraisals for federally-supported transactions. Also by law, you have the right to receive a copy of the completed appraisal from your lending agency. Contact Mike Noble Appraisals if you have any concerns about the appraisal process.

Myth: Market value will always be equivocal to the assessed value of the property.

Fact: It is probable that Alabama, like most states, validates the common myth that the assessed value is the same as the market value; however, this is not always true. At times when interior remodeling has been done and the assessor is has not investigated the improvement or properties in the area have not been reassessed for quite a while, it may vary wildly.

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

Fact: The value of the house does not affect the pay of the appraiser; as a result, the appraiser has no personal interest in the opinion of value of the property. This means that he will provide business with impartiality and objectivity regardless for whom the appraisal is provided.

Myth: Any time market value is found, it should be the same as the replacement cost of the house.

Fact: Without any influence from any external parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a specific property. Replacement cost is the dollar amount necessary to reconstruct a property in-kind.

Myth: Appraisers use a formula, like a certain price per square foot, to arrive at the value of a home.

Fact: Appraisers make an exhaustive analysis of all factors pertaining to the price of a house, including its location, condition, size, proximity to facilities and recent sale prices of comparable houses.

Myth: When the economy is strong and the worth of homes are reported to be appreciating by a certain percentage, the other homes in the area can be expected to increase based on that same percentage.

Fact: Value appreciation of a specific house must be determined on a case-by-case basis, factoring in information on comparable houses and other relevant considerations. This is true in excellent economic times as well as bad.

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

Fact: House value is determined by a number of variables, including area, condition, improvements, amenities, and market trends. As you can see, none of these things can be derived simply by examining the house from the exterior.

Myth: Considering that the consumer is the one who provides the funding to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.

Fact: Legally, the appraisal is owned by the lending company unless the lender relinquishes their interest in the document. However, consumers have to be provided with a copy of the document upon written request, due to the Equal Credit Opportunity Act.

Myth: Home buyers need not worry about what is in their appraisal 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. There is a great deal of information contained in an appraisal report that could 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.