Appraisal myths & facts

It is required by legal agencies that a real estate appraiser must be state-licensed to produce appraisal reports for federally-related home sales in Massachusetts. 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 process.

Myth: Assessed value will always be the same as to market value.

Fact: While most states support the idea that assessed value is the same as estimated market value, this commonly is not the case. Examples include when interior remodeling has occurred and the assessor is unaware of the improvements, or when properties in the area have not been reassessed for an prolonged period.

Myth: The appraised value of a home will change depending upon whether the appraisal is ordered for the buyer or the seller.

Fact: There is no vested interest on the part of the appraiser in the result of the analysis, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is conducted.

Myth: The replacement value of the property will be is on par with the market value.

Fact: Without any suggestion from any different parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a specific house. The dollar amount demanded to rebuild a house is what forms the replacement cost.

Myth: Appraisers use a formula, like a certain price per square foot, to conclude the worth of a home.

Fact: Appraisers complete a detailed analysis of all factors pertaining to the value 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 worth of properties in a given neighborhood are found to be rising by a particular percentage - the costs of individual properties in the vicinity can be expected to appreciate by that same percentage.

Fact: All increase of price is on a case-by-case basis, concluded by data on relevant elements and the data of comparable houses. It doesn't matter if the economy is on the rise or declining.

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

Fact: To find an accurate price beyond all doubt, an appraiser must inspect the house on a variety of factors based on area, condition, improvements, amenities, and current market trends. Obviously, none of these variables can be derived just by examining the house from the outside.

Myth: Since the consumer is the person who provides the capital to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal report is theirs.

Fact: Unless a lending agency releases its vestment in the report, it is legally owned by the lending agency that purchased the appraisal. By the Equal Credit Opportunity Act, any home buyer asking for a copy of the document must be provided with it by their lending agency.

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

Fact: Only if consumers look at 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 report makes an invaluable record for future reference, comprised of 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 proximity.