Appraisal myths debunked

Legally, a real estate appraiser needs to be state certified to perform legitimate real estate appraisals for federally-supported transactions. Also by law, you are allowed to request a copy of the finished appraisal from your lender. Contact our professional staff if you have any concerns about the appraisal process.

Myth: Assessed value should always be similar to to market value.

Fact: It might be that New Jersey, like most states, validates the idea that the assessed value equates to the market value; however, this is not often the case. Generally when interior remodeling has been done and the assessor is not aware of the improvement or other houses in the Princeton have not been reassessed for years or more, it may vary wildly.

Myth: Depending on if the appraisal is drawn up for the buyer or the seller, the appraised value of the property will vary.

Fact: The appraiser has no personal interest in the outcome of the appraisal report and should conduct services with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.

Myth: Any time market value is found, it should be the same as the replacement cost of the house.

Fact: Without any pressure from any different parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific property. The replacement cost is the dollar amount necessary to rebuild a property in-kind.

Myth: Appraisers use a formula, like a certain price per square foot, to figure out the value of a property.

Fact: Appraisers make an exhaustive analysis of all factors pertaining to the price of a property, including its location, condition, size, proximity to facilities and recent sale prices of comparable homes.

Myth: As homes increase their worth by a certain percentage - in a strong economy - the houses within the same neighborhood are figured to increase by the same amount.

Fact: Worth increase of a specific house has to be determined on an individualized basis, factoring in information on comparable properties and other relevant considerations. It doesn't matter if the economy is doing well or declining.

Myth: Just looking at what the house looks like on the outside gives an idea of its value.

Fact: To conclude an accurate price beyond all doubt, an appraiser must examine the property on a variety of factors based on area, condition, improvements, amenities, and market trends. An exterior inspection definitely can't provide all of the information required.

Myth: Considering that the consumer is the party who provides the money to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal belongs to them.

Fact: Legally, the report is owned by the lender unless the lender releases their interest in the appraisal. However, home buyers must be provided with a copy of the appraisal report upon written request, under the Equal Credit Opportunity Act.

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

Fact: It is very important for home buyers to look at a copy of their appraisal so that they can double-check 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. An 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 proximity.