Appraisal myths & facts

Legally, a real estate appraiser needs to be state certified to produce substantiated real estate appraisals for federally-supported sales. The law gives you the right to acquire a copy of your finished appraisal from your lender after it has been produced. Contact Onstott Appraisal Services, LLC if you have any questions about the appraisal procedure.

Myth: Assessed value generally will be similar to to market value.

Fact: It is probable that Colorado, like most states, validates the common myth that the assessed value equals the market value; however, this certainly varies based on state-to-state. Interior reconstruction that the assessor is not aware of and a lack of reassessment on nearby homes are excellent examples of why the price can vary.

Myth: The buyer or the seller often will have some pull in the cost of the home 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 complete his work with impartiality and independence, despite for whom the appraisal is created.

Myth: Market value should equal replacement cost.

Fact: Market value is acquired by what a willing buyer would be interested in paying a willing seller for a particular home, with neither being under undue influence to buy or sell. Replacement cost is the dollar amount needed to reconstruct a house in-kind.

Myth: Appraisers use a formula, like a specific price per square foot, to come to the cost of a property.

Fact: There are many differing formulae that an appraiser will use to make a full investigation of every factor pertaining to the property, such as the size, location, condition, how close it is to specific facilities and the worth of recently sold comparable properties.

Myth: As properties increase their worth by a specific percentage - in a strong economic state - the homes nearby are figured to increase by the same amount.

Fact: All appreciation of value is on a one-on-one basis, found by information on relevant conditions and the data of comparable homes. It doesn't matter if the economy is on the rise or declining.

Myth: You can often find what a property is worth simply by looking at the outside.

Fact: To conclude an accurate price beyond all doubt, an appraiser must assess 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 information necessary.

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

Fact: The appraisal is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the appraisal. By the Equal Credit Opportunity Act, any consumer demanding a copy of the document must be provided with one by their lending company.

Myth: It doesn't matter to consumers what's in the appraisal so long as it satisfies the necessities of their lending company.

Fact: Only if consumers look at a copy of their appraisal 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. Also, the report makes an invaluable record for future reference, filled with useful and often-revealing information - 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 proximity.