Appraisal myths & facts

By law, an appraiser needs to be state-licensed to perform appraisals for federally-supported sales. The law entitles you to get a copy of your completed report from your lending agency after it has been provided. Contact our professional staff if you have any concerns about the appraisal process.

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

Fact: It is possible that Massachusetts, like most states, validates the idea that the assessed value equates to the market value; however, this is sometimes the exception rather than the rule. Examples include when interior reconstruction has happened and the assessor does not know about the improvements, or when properties in the vicinity have not been reassessed for an prolonged period.

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

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

Myth: Any time market value is found, it should equate to the replacement cost of the home.

Fact: The way market value is arrived at is based on what a home buyer would likely pay a willing seller for a home without being under pressure from any outside group to buy or sell. The dollar amount needed to rebuild a house is what shows the replacement cost.

Myth: Specific methods, such as the price per square foot, are the ways appraisers use to ascertain the value of a house.

Fact: There are many varied ways that an appraiser will use to make an in-depth investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to undesirable facilities and the worth of recently sold comparable homes.

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

Fact: All appreciation of worth is on a case-by-case basis, determined by data on relevant considerations and the data of comparable homes. It makes no difference whether the economy is powerful or on the decline.

Myth: Just looking at what the house looks like on its exterior gives a good idea of its cost.

Fact: There are a number of different variables that conclude the value of a house; these factors include location, condition, improvements, amenities, and market trends. As you can see, none of these variables can be found simply by examining the house from the exterior.

Myth: Because the consumer is the one who puts up the money to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal is theirs.

Fact: The report is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the report. Under the Equal Credit Opportunity Act, any consumer requesting a copy of the document must be provided with it by their lender.

Myth: There's no reason for consumers to even worry about what the appraisal contains so long as their lending institution is satisfied.

Fact: It is very important for consumers to check over a copy of their appraisal report so that they can double-check 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 report can double as a record for the future, containing an incredible amount of information - including, but 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 vicinity.