Common myths about appraising

Legally, an appraiser needs to be state certified to produce legitimate appraisal reports for federally-backed purchase. The law entitles you to acquire a copy of your completed appraisal from your lending agency after it has been provided. Contact our professional staff if you have any concerns about the appraisal procedure.

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

Fact: It might be that Illinois, like most states, validates the common myth that the assessed value is no different from the market value; however, this certainly varies based on state-to-state. Interior remodeling that the assessor is unaware of and a lack of reassessment on nearby properties are prime examples of why the price can vary.

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

Fact: The value of the home does not affect the salary of the appraiser; as such, the appraiser has no pressured interest in the cost of the home. Obviously, he will complete his business with impartiality and independence regardless for whom the appraisal is provided.

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

Fact: Market value is based on what a willing buyer would be interested in paying a willing seller for a specific house, with neither being under duress to buy or sell. Replacement value is the dollar amount required to rebuild a house in-kind.

Myth: Appraisers use a calculation, such as a certain price per square foot, to figure out the cost of a property.

Fact: There are many differing formulae that an appraiser will use to make a detailed analysis of every factor pertaining to the property, such as the size, location, condition, how close it is to certain facilities and the sales price of recently sold comparable houses.

Myth: As houses appreciate by a specific percentage - in a robust economy - the homes around the appreciating properties are expected to appreciate by the same amount.

Fact: All appreciation of value is on a one-on-one basis, determined by data on relevant elements and the data of comparable homes. This is true in fair economic times as well as poor.

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

Fact: To determine an accurate value beyond all doubt, an appraiser must inspect the house on a variety of factors based on location, condition, improvements, amenities, and market trends. An outside-only inspection definitely can't provide all of the data needed.

Myth: Because consumers fund appraisal reports when applying for loans to purchase or refinance their home, they legally own their appraisal report.

Fact: Unless a lender releases its interest in the report, it is legally owned by the lending agency that ordered the appraisal. However, home buyers must be provided with a copy of the appraisal report upon written request, through the Equal Credit Opportunity Act.

Myth: There's no point for consumers to even worry about what the appraisal report contains so long as their lending company is fine with the contents therein.

Fact: A consumer should definitely inspect their appraisal; there could be some questions or some concerns with the accuracy of the appraisal that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can double as a record for the future, since it contains an exorbitant amount of data - including, but not limited to 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.