Appraisal myths & facts

It is mandated by law that a real estate appraiser needs to be state-licensed to create appraisal reports for federally-related home purchases in Arizona. Also by law, you have the ability to request a copy of the completed appraisal report from your lending agency. Contact West Valley Appraisal Services if you have any concerns about the appraisal process.

Myth: The value that is ascertained by the appraiser will be exactly the same as the market value.

Fact: This usually isn't true; most states do support the idea that the assessed value is the same as market value, but not always. Examples include when interior reconstruction has happened and the assessor does not know about the improvements, or when houses in the vicinity have not been reassessed for an extended period of time.

Myth: The value of a house will be different depending upon whether the appraisal is provided for the buyer or the seller.

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

Myth: Market value should equate to replacement cost.

Fact: Without any suggestion from any outside parties to buy or sell, market value is what a willing buyer would pay a willing seller for a particular property. Replacement cost is the dollar amount needed to reconstruct a property in-kind.

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

Fact: Appraisers complete a detailed analysis of all factors pertaining to the price of a property, including its location, condition, size, proximity to facilities and recent sale prices of comparable properties.

Myth: In a robust economy - when the prices of homes in a given neighborhood are reported to be rising by a certain percentage - the values of individual houses in the proximity can be expected to increase by that same percentage.

Fact: Any worth at which an appraiser concludes concerning a specific house is always individualized, based on certain factors concluded from the data of comparable houses and other considerations within the property itself. It makes no difference if the economy is excellent or on the decline.

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

Fact: To determine an accurate price beyond all doubt, an appraiser must inspect the property on a variety of factors based on location, condition, improvements, amenities, and current market trends. An external inspection definitely can't provide all of the data necessary.

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

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

Myth: It doesn't mean anything to consumers what's in the appraisal so long as it meets the requirements of their lender.

Fact: It is a very good idea for home buyers to peruse a copy of their report so that they can verify the accuracy of the document, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can serve as a record for the future, containing a great deal 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 proximity.