Common myths about appraising

It is mandated by law that a real estate appraiser must be state licensed to create appraisal reports for federally supported property purchases in Michigan. The law gives you the right to acquire a copy of your completed appraisal from your lending agency after it has been produced. Contact Raven Appraisal Services if you have any questions about the appraisal procedure.

Myth: Assessed value should always equate to 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. Interior remodeling that the assessor is not aware of and a lack of reassessment on nearby properties are perfect examples of why this occurs.

Myth: The value of a home will vary depending upon if the appraisal is produced for the buyer or the seller.

Fact: The appraiser has no vested interest in the outcome of the appraisal 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: Market value is acquired by what a willing buyer would likely pay a willing seller for a certain house, with neither being under pressure to buy or sell. Replacement cost is the dollar amount necessary to reconstruct a house in-kind.

Myth: Specific methods, such as the price per square foot of the property, are the methods appraisers use to ascertain the cost 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 worth of comparable homes.

Myth: In a robust economy - when the costs of homes in a given area are found to be increasing by a particular percentage - the costs of individual houses in the vicinity can be expected to increase by that same percentage.

Fact: Price appreciation of a specific property must be determined on a case-by-case basis, factoring in data on comparable houses and other relevant considerations. It doesn't matter if the economy is on the rise or declining.

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

Fact: Home worth is determined by a multitude of variables, including - but not limited to - location, condition, improvements, amenities, and market trends. As you can see, none of these variables can be derived simply by examining the home from the outside.

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

Fact: Legally, the appraisal report is owned by the lending company unless the lender relinquishes their interest in the appraisal. However, home buyers must be given a copy of the appraisal report upon written request, due to the Equal Credit Opportunity Act.

Myth: Consumers need not be concerned with what is in their report so long as it satisfies the needs of their lending company.

Fact: A consumer should definitely read through their document; there will probably be some questions or some worries with the accuracy of the appraisal report that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes an excellent record for future reference, containing useful and often-revealing 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 area.