Common myths about appraising

Legally, an appraiser needs to be state certified to produce substantiated appraisal reports for federally-backed sales. Also by law, you have the ability to receive a copy of the finished appraisal from your lending agency. Contact us if you have any questions about the appraisal process.

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

Fact: It might be that Indiana, like most states, validates the suggestion that the assessed value equates to the market value; however, this is sometimes the exception rather than the rule. There are times when interior remodeling has been done and the assessor is unaware of the improvement or other houses in the area have not been reassessed for years or more, it may vary wildly.

Myth: The buyer or the seller can have some pull in the cost of the home depending upon for whom the appraiser is working.

Fact: The cost of the house does not affect the payment of the appraiser; as such, the appraiser has no preconceived interest in the value of the house. Obviously, he will render business with impartiality and independence regardless for whom the appraisal is conducted.

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

Fact: The way market value is found is based on what a home buyer would be willing to pay a willing seller for a house without being under influence from any external party to purchase or sell. Replacement cost is the dollar amount necessary to rebuild a house in-kind.

Myth: Appraisers use a calculation, such as a specific price per square foot, to conclude the cost of a home.

Fact: An appraisal report is a collection of data based on the house's size, location, proximity to undesirable facilities, the condition of the house and the value of recent comparable sales. You can depend on Appraisals by Deb Lewellen, Inc.'s staff to be ethical in assessing this information.

Myth: In a strong economy - when the prices of houses in a given area are found to be rising by a certain percentage - the costs of individual homes in the area can be expected to appreciate by that same percentage.

Fact: Value increase of a certain property is always concluded on a case-by-case basis, factoring in information on comparable properties and other relevant considerations. It doesn't matter if the economy is on the rise or declining.

Myth: You can often see what a home is worth simply by looking at the outside.

Fact: Property worth is concluded by a number of variables, including area, condition, improvements, amenities, and market trends. There's no real way to get all of this information from simply examining the house from the exterior.

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

Fact: The appraisal is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the appraisal report. Consumers have to be supplied with a copy of the document through request because of the Equal Credit Opportunity Act.

Myth: Consumers need not be concerned with what is in their appraisal report so long as it meets the necessities of their lending institution.

Fact: A home buyer should definitely look through their appraisal report; there might be some questions or some concerns with the accuracy of the analysis that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can serve as a record for the future, since it contains an exorbitant amount of information - 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 vicinity.