Appraisal myths & facts

It is enforced by the government that a real estate appraiser is required to be state-licensed to write appraisal reports for federally-supported home purchases in Alabama. You also have the right to request a copy of the finished appraisal report from your lender. Contact our professional staff if you have any questions about the appraisal process.

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

Fact: While most states uphold the suggestion that assessed value approximates estimated market value, this generally is not the case. Interior reconstruction that the assessor has not investigated and a dearth of reassessment on nearby homes are perfect examples of why this occurs.

Myth: Depending on whether the appraisal is done for the buyer or the seller, the appraised value of the property will vary.

Fact: The appraiser has no vested interest in the result of the report and should render his job with independence, objectivity and impartiality - no matter for whom the appraisal is written.

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

Fact: Market value is acquired by what a willing buyer would be interested in paying a willing seller for a specific property, with neither being under duress to buy or sell. If the home were rebuilt, the dollar amount needed to do so would set the replacement cost.

Myth: Specific formulae, like the price per square foot of the property, are what appraisers use to determine the cost of a home.

Fact: Appraisers make an exhaustive analysis of all factors in consideration to the price of a property, including its location, condition, size, proximity to facilities and recent costs of comparable properties.

Myth: As homes appreciate by a certain percentage - in a strong economic state - the houses nearby are expected to increase by the same amount.

Fact: Worth increase of a specific home is always determined on a case-by-case basis, factoring in data on comparable houses and other relevant elements. It doesn't matter if the economy is doing well or declining.

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

Fact: To conclude an accurate value beyond all doubt, an appraiser must examine the home on a variety of factors based on area, condition, improvements, amenities, and current market trends. As you can see, none of these things can be found just by examining the property from the exterior.

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

Fact: Legally, the report is owned by the lending agency unless the lender relinquishes their interest in the document. Consumers must be given a version of the document through request due to the Equal Credit Opportunity Act.

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

Fact: Only if home buyers examine a copy of their appraisal report 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. An appraisal can double 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 area.