Common myths about appraising

It is enforced by legal agencies that an appraiser is required to be state-licensed to produce appraisal reports for federally-supported home sales in Massachusetts. The law allows you to get a copy of your finished appraisal report from your lending agency after it has been provided. Contact our professional staff if you have any concerns about the appraisal process.

Myth: The value that is assessed by the appraiser should be equivalent to the market value.

Fact: This usually isn't true; most states do support the idea that the assessed value is the same as market value, but not always. Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby homes are prime examples of why there might be a differential in price.

Myth: The buyer or the seller sometimes may have an influence 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 written.

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

Fact: The way market value is found is based on what a buyer would be willing to pay a willing seller for a house without being under duress from any external group to buy or sell. The replacement cost is the dollar amount needed to reconstruct a house in-kind.

Myth: Specific formulae, like the price per square foot of the property, are the ways appraisers use to arrive at the value of a home.

Fact: Appraisers complete a detailed analysis of all factors in consideration to the price of a home, including its location, condition, size, proximity to facilities and recent worth of comparable houses.

Myth: As properties appreciate by a certain percentage - in a robust economic state - the homes in proximity are figured to appreciate by the same amount.

Fact: Any value at which an appraiser arrives concerning a specific home is always individualized, based on certain factors derived from the information of comparable houses and other considerations within the house itself. It doesn't matter if the economy is doing well or declining.

Myth: The house's exterior is determinate of the actual worth of the property; there is no need to do an interior inspection.

Fact: Home worth is determined by a multitude of factors, including area, condition, improvements, amenities, and market trends. Obviously, none of these variables can be derived just by inspecting the property from the exterior.

Myth: Since the consumer is the person 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 report is theirs.

Fact: The appraisal report is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the report. By the Equal Credit Opportunity Act, any consumer requesting a copy of the appraisal report must be given one by their lending company.

Myth: Home buyers need not care about what is in their appraisal document so long as it exceeds the necessities of their lending institution.

Fact: It is very important for home buyers to check over a copy of their appraisal so that they can double-check the accuracy of the document, in case it's required to question its veracity. 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 appraisal 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 vicinity.