Common myths about appraising

It is required by legal agencies that a real estate appraiser needs to be state-licensed to perform appraisal reports for federally-related property transactions in Pennsylvania. Also by law, you have the ability to receive a copy of the finished appraisal from your lending agency. Contact our professional staff if you have any questions about the appraisal process.

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

Fact: While most states uphold the suggestion that assessed value approximates estimated market value, this usually is not the case. There are times when interior remodeling has been done and the assessor is not aware of the improvement or other homes in the neighborhood have not been reassessed for quite some time, it may vary wildly.

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

Fact: The appraiser has no vested interest in the result of the report and should render his job with independence, objectivity and impartiality - no matter for whom the appraisal is provided.

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

Fact: The way market value is derived is based on what a buyer would likely pay a willing seller for a house without being under influence from any external group to buy or sell. If the home were rebuilt, the dollar amount needed to do so would make up the replacement cost.

Myth: Appraisers use a formula, like a specific price per square foot, to arrive at the worth of a house.

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: In a robust economy - when the prices of houses in a given area are found to be rising by a particular percentage - the worth of individual houses in the area can be expected to appreciate by that same percentage.

Fact: All increase of worth is on a one-on-one basis, found by data on relevant conditions and the data of comparable homes. This is true in excellent economic times as well as bad.

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

Fact: House worth is determined by a multitude of variables, including area, condition, improvements, amenities, and market trends. An outside-only inspection obviously can't provide all of the information required.

Myth: Because consumers pay for appraisal reports when applying for loans to buy or refinance real estate, they legally own their appraisal report.

Fact: The appraisal report is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the appraisal report. However, home buyers must be supplied with a copy of the appraisal upon written request, through the Equal Credit Opportunity Act.

Myth: It doesn't concern consumers what's in the appraisal so long as it meets the necessities of their lender.

Fact: Only if consumers examine a copy of their report can they ensure 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 data contained in an report that can 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.