Appraisal myths & facts

It is required by the government that an appraiser must be state-licensed to create appraisals for federally-related real estate transactions in New Jersey. Also by law, you have the right to request a copy of the completed appraisal from your lending agency. Contact our professional staff if you have any concerns about the appraisal process.

Myth: The value that is assessed by the appraiser will be equivalent to the market value.

Fact: This is not often the case; most states do support the suggestion that the assessed value is the same as market value, but not always. Examples include when interior reconstruction has happened and the assessor is unaware of the improvements, or when homes in the area have not been reassessed for an extended period of time.

Myth: The buyer or the seller sometimes may have an influence in the cost of the house depending upon for whom the appraiser is working.

Fact: The cost of the property does not affect the pay of the appraiser; due to this, the appraiser has no preconceived interest in the worth of the house. Obviously, he will complete his business with impartiality and independence regardless for whom the appraisal is produced.

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

Fact: The way market value is derived is based on what a buyer would likely pay a willing seller for a property without being under duress from any outside group to buy or sell. The dollar amount required to reconstruct a home is what constitutes the replacement cost.

Myth: There are specific ways that appraisers use to determine the opinion of value of a home, such as the price per square foot.

Fact: There are many varied methods that an appraiser will use to make a comprehensive analysis of every factor pertaining to the house, such as the size, location, condition, how close it is to specific facilities and the cost of recently sold comparable homes.

Myth: As properties appreciate by a specific percentage - in a robust economic state - the properties in proximity are figured to increase by the same amount.

Fact: Cost increase of a specific home has to be determined on an individualized basis, factoring in information on comparable homes and other relevant specifications within the property itself. It doesn't matter if the economy is on the rise or declining.

Myth: Just seeing what the house looks like on its exterior gives an idea of its worth.

Fact: Property worth is determined by a number of variables, including location, condition, improvements, amenities, and market trends. An exterior inspection definitely can't provide all of the data required.

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

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

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

Fact: A home buyer should definitely inspect their appraisal report; there might be some questions or some concerns with the accuracy of the appraisal that must be addressed. 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 exorbitant amount of data - 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 proximity.