Appraisal myths & facts

It is mandated by the government that a real estate appraiser is required to be state-licensed to perform appraisal reports for federally-related home sales in California. You have the ability to acquire a copy of the completed report from your lending agency. Contact us if you have any concerns about the appraisal procedure.

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

Fact: It could be that California, like most states, supports the common myth that the assessed value equals the market value; however, this is not always true. Examples include when interior remodeling has happened and the assessor has not seen the improvements, or when properties in the vicinity have not been reassessed for an extended time.

Myth: Depending on whether the appraisal is ordered for the buyer or the seller, the appraised value of the property will vary.

Fact: The appraiser has no personal interest in the result of the appraisal and should complete his task with independence, objectivity and impartiality - no matter for whom the appraisal is provided.

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

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 external group to buy or sell. Replacement cost is the dollar amount needed to reconstruct a house in-kind.

Myth: Specific methods, like the price per square foot, are the methods appraisers use to determine the price of a home.

Fact: Appraisers complete a full analysis of all factors pertaining to the cost of a house, including its location, condition, size, proximity to facilities and recent worth of comparable properties.

Myth: In a robust economy - when the costs of homes in a given neighborhood are reported to be appreciating by a particular percentage - the prices of individual houses in the proximity can be expected to appreciate by that same percentage.

Fact: Worth increase of a specific property must be concluded on an individualized basis, factoring in data on comparable homes and other relevant specifications within the house itself. This is true in excellent economic times as well as poor.

Myth: Just examining what the home looks like on the outside gives an idea of its value.

Fact: To find an accurate price beyond all doubt, an appraiser must inspect the property on a variety of factors based on location, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from just viewing the home from the outside.

Myth: Since you're the one paying for the appraisal when applying for your loan to purchase or refinance real estate, you own the ordered appraisal.

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

Myth: There's no need for home buyers to even concern themselves with what the report contains so long as their lending company is fine with the contents therein.

Fact: It is a very good idea for consumers to go through a copy of their appraisal report so that they can double-check the accuracy of the report, in case there is a need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes a near perfect record for future reference, containing helpful and often-revealing data - including 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.