Appraisal myths debunked

It is enforced by law that an appraiser must be state-licensed to perform appraisals for federally-related real estate transactions in Colorado. Also by law, you have the right to receive a copy of the finished appraisal from your lender. Contact our professional staff if you have any questions about the appraisal process.

Myth: Market value needs to be similar to the assessed value of the property.

Fact: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always. Generally when interior remodeling has occurred and the assessor is not aware of the improvement or other houses in the neighborhood have not been reassessed for a good length of time, it may vary wildly.

Myth: The opinion of value of a home will differ depending upon whether the appraisal is provided for the buyer or the seller.

Fact: The appraiser has no personal interest in the outcome of the appraisal report and should render services 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 buyer would be willing to pay a willing seller for a home without being under influence from any outside group to buy or sell. If the home were rebuilt, the dollar amount necessary to do so would make up the replacement cost.

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

Fact: Appraisers complete a full analysis of all factors in consideration to the value of a home, including its location, condition, size, proximity to facilities and recent worth of comparable homes.

Myth: When the economy is robust and the worth of homes are found to be rising by a certain percentage, the other homes in the area can be expected to increase based on that same percentage.

Fact: Value increase of a specific property is always determined on a case-by-case basis, factoring in information on comparable homes and other relevant considerations. It doesn't matter if the economy is on the rise or declining.

Myth: The house's exterior is determinate of the actual value of the property; it is unnecessary to do an interior inspection.

Fact: To determine an accurate worth beyond all doubt, an appraiser must inspect the house on a variety of factors based on area, condition, improvements, amenities, and market trends. As you can see, none of these variables can be derived simply by examining the home from the exterior.

Myth: Since you're the one coughing up the cash for the appraisal report when applying for the loan to purchase or refinance your home, you own the produced appraisal report.

Fact: The report is, in fact, legally owned by the lender - unless the lender "releases its interest" in the appraisal report. Consumers must be supplied with a copy of the report through request as per the Equal Credit Opportunity Act.

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

Fact: Only if home buyers examine a copy of their appraisal can they verify 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 appraisal report makes a near perfect record for future reference, filled with useful 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.