Common myths about appraising

By law, an appraiser needs to be state-licensed to produce appraisals for federally-backed sales. You have the ability to receive a copy of the finished appraisal from your lending agency. Contact our professional staff if you have any concerns about the appraisal process.

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

Fact: It could be that North Carolina, like most states, validates the common myth that the assessed value is the same as the market value; however, this is sometimes the exception rather than the rule. Interior remodeling that the assessor is not aware of and a dearth of reassessment on nearby properties are prime examples of why the price can vary.

Myth: Depending on whether the appraisal is provided for the buyer or the seller, the value of the house will vary.

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

Myth: Market value will equal replacement cost.

Fact: Without any influence from any different parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific home. The dollar amount necessary to reconstruct a home is what forms the replacement cost.

Myth: Appraisers use a formula, such as a certain price per square foot, to come to the value of a property.

Fact: Appraisers complete an exhaustive analysis of all factors pertaining to the value of a house, including its location, condition, size, proximity to facilities and recent costs of comparable houses.

Myth: In a robust economy - when the sales prices of properties in a given neighborhood are reported to be increasing by a certain percentage - the costs of individual properties in the area can be expected to increase by that same percentage.

Fact: Price increase of a specific house has to be determined on an individualized basis, factoring in data on comparable properties and other relevant considerations. It makes no difference whether the economy is strong or poor.

Myth: You can generally see what a house is worth simply by looking at the exterior.

Fact: Home value is determined by a multitude of variables, including - but not limited to - area, condition, improvements, amenities, and market trends. As you can see, none of these things can be derived simply by looking at the property from the outside.

Myth: Because consumers pay for the appraisal when applying for loans to buy or refinance their house, they own their appraisal report.

Fact: Unless a lending agency releases its interest in the appraisal report, it is legally owned by the lending agency that ordered the appraisal. Due the Equal Credit Opportunity Act, any home buyer requesting a copy of the report must be given it by their lending company.

Myth: Home buyers need not worry about what is in their document so long as it exceeds the needs of their lending company.

Fact: It is a very good idea for home buyers to check over a copy of their appraisal so that they can verify the accuracy of the document, in case there is a need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of information contained in an appraisal that should be useful to the consumer in the future, such as 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.