Common myths about appraising

It is mandated by law that a real estate appraiser is required to be state-licensed to create appraisals for federally-supported real estate purchases in Tennessee. You have the ability to receive a copy of the finished report from your lender. Contact our professional staff if you have any questions about the appraisal procedure.

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

Fact: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. Examples include when interior reconstruction has occurred and the assessor does not know about the improvements, or when homes in the area have not been reassessed for an prolonged period.

Myth: Depending on whether the appraisal is done for the buyer or the seller, the appraised value of the home will vary.

Fact: The price of the house does not affect the pay of the appraiser; as such, the appraiser has no preconceived interest in the value of the property. Obviously, he will conduct business with impartiality and independence regardless for whom the appraisal is produced.

Myth: Any time market value is established, it should equal the replacement cost of the house.

Fact: Without any suggestion from any outside parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a specific property. If the house were reconstructed, the dollar amount necessary to do so would be the replacement cost.

Myth: Appraisers use a formula, like a certain price per square foot, to arrive at the cost of a property.

Fact: Appraisers make a full analysis of all factors in consideration to the worth of a home, including its location, condition, size, proximity to facilities and recent opinion of value of comparable homes.

Myth: When the economy is robust and the sales prices of homes are reported to be rising by a certain percentage, the other houses in the vicinity can be expected to increase based on that same percentage.

Fact: Any value at which an appraiser concludes in regards to a particular house is always individualized, based on certain factors derived from the information of comparable houses and other specifications within the house itself. This is true in strong economic times as well as poor.

Myth: Just seeing what the property looks like on the outside gives an idea of its value.

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

Myth: Since you're the one providing the money for the appraisal when applying for your loan to buy or refinance your home, you own the ordered appraisal report.

Fact: Unless a lender releases its vestment in the document, it is legally owned by the lending agency that purchased the appraisal. Consumers have to be given a version of the appraisal report through request because of the Equal Credit Opportunity Act.

Myth: There's no reason for consumers to even care about what the appraisal report contains so long as their lending agency is fine with the contents therein.

Fact: It is a very good idea for consumers to go through a copy of their appraisal so that they can double-check the accuracy of the report, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can double as a record for the future, as it contains a great deal of data - 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 vicinity.