Common myths about appraising

By law, an appraiser is enforced to be state-licensed to perform appraisals for federally-supported sales. The law entitles you to acquire a copy of your completed report from your lender after it has been provided. Contact our professional staff if you have any concerns about the appraisal procedure.

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

Fact: This is not often the case; most states do support the concept that the assessed value is the same as market value, but not always. Often when interior remodeling has occurred and the assessor is unaware of the improvement or other homes in the neighborhood have not been reassessed for quite a while, it may vary wildly.

Myth: The buyer or the seller often will have an influence in the value of the house depending upon for whom the appraiser is working.

Fact: There is no personal interest on the part of the appraiser in the outcome of the analysis, therefore he will conduct his work with impartiality and independence, despite for whom the appraisal is ordered.

Myth: Market value will be the same as replacement cost.

Fact: Without any suggestion from any outside parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a particular property. Replacement value is the dollar amount necessary to rebuild a property in-kind.

Myth: Certain methods, like the price per square foot of the property, are the ways appraisers use to ascertain the cost of a house.

Fact: An appraisal is an assertion of data based on the property's size, location, proximity to undesirable facilities, the condition of the property and the price of recent comparable sales. You can count on Floyd Knows Properties, LLC's appraisers to be professional in assessing this information.

Myth: In a strong economy - when the values of properties in a given neighborhood are found to be rising by a certain percentage - the costs of individual properties in the proximity can be expected to increase by that same percentage.

Fact: Any value at which an appraiser concludes in regards to a particular home is always individualized, based on certain factors found from the information of comparable properties and other considerations within the home itself. This is true in strong economic times as well as bad.

Myth: Just examining what the house looks like on its exterior gives a good idea of its cost.

Fact: There are a multitude of different factors that show property value; these factors include area, condition, improvements, amenities, and market trends. An outside-only inspection certainly can't provide all of the information necessary.

Myth: Since the consumer is the party who provides the money to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal belongs to them.

Fact: Unless a lending agency releases its interest in the document, it is legally owned by the lending company that ordered the appraisal. Due the Equal Credit Opportunity Act, any home buyer asking for a copy of the appraisal report must be given it by their lender.

Myth: Home buyers need not worry about what is in their report so long as it meets the needs of their lending company.

Fact: A home buyer should definitely read through their document; there will probably be some questions or some concerns about the accuracy of the appraisal report 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, containing an incredible amount of data - including, but certainly 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.