Appraisal myths debunked

It is enforced by the government that a real estate appraiser must be state-licensed to write appraisal reports for federally-related real estate purchases in Massachusetts. You are also entitled by law to receive a copy of the finished appraisal report from your lending agency. Contact our professional staff if you have any concerns about the appraisal procedure.

Myth: The value that is assessed by the appraiser will be the same as the market value.

Fact: It is probable that Massachusetts, like most states, supports the suggestion that the assessed value equals the market value; however, this certainly varies based on state-to-state. Interior remodeling that the assessor is not aware of and a lack of reassessment on nearby houses are exact examples of why this occurs.

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

Fact: There is no real interest on the part of the appraiser in the result of the analysis, therefore he will conduct his work with impartiality and independence, regardless for whom the appraisal is created.

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

Fact: The way market value is found is based on what a buyer would likely pay a willing seller for a property without being under pressure from any external party to buy or sell. Replacement value is the dollar amount required to reconstruct a home in-kind.

Myth: Certain methods, such as the price per square foot, are the methods appraisers use to come to the worth of a home.

Fact: Appraisers make an exhaustive analysis of all factors in consideration to the value of a home, including its location, condition, size, proximity to facilities and recent sale prices of comparable homes.

Myth: When the economy is strong and the cost of houses are found to be appreciating by a certain percentage, the other properties in the area can be expected to rise based on that same percentage.

Fact: Value increase of a certain property must be determined on a case-by-case basis, factoring in information on comparable properties and other relevant considerations. This is true in fair economic times as well as bad.

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

Fact: There are a multitude of different factors that show the value of a home; these factors include location, condition, improvements, amenities, and market trends. Obviously, none of these factors can be derived just by inspecting the home from the outside.

Myth: Because the consumer is the party who puts up the funding to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal report is theirs.

Fact: Legally, the document is owned by the lending company unless the lender relinquishes their interest in the report. Under the Equal Credit Opportunity Act, any consumer demanding a copy of the appraisal report must be given it by their lender.

Myth: Consumers need not care about what is in their appraisal report so long as it meets the needs of their lending company.

Fact: It is a very good idea for home buyers to look at a copy of their appraisal so that they can verify the accuracy of the report, in case they need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of data stored in an report that will probably be useful to the home buyer 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.