Common myths about appraising

It is enforced by law that a real estate appraiser is required to be state-licensed to perform appraisal reports for federally-related home purchases in New Jersey. The law gives you the right to get a copy of your finished appraisal from your lender after it has been provided. Contact our professional staff if you have any questions about the appraisal process.

Myth: Assessed value should equate to market value.

Fact: While most states support the concept that assessed value approximates estimated market value, this usually is not the case. Sometimes when interior remodeling has occurred and the assessor is has not investigated the improvement or properties in the area have not been reassessed for years or more, it may vary wildly.

Myth: The appraised value of a property will be different depending upon whether the appraisal is conducted for the buyer or the seller.

Fact: The appraised value of the property does not affect the payment of the appraiser; due to this, the appraiser has no pressured interest in the value of the property. Obviously, he will complete his business with impartiality and objectivity regardless for whom the appraisal is created.

Myth: The replacement value of the house will be is on par with the market value.

Fact: Market value is arrived at through what a willing buyer would be interested in paying a willing seller for a particular property, with neither being under pressure to buy or sell. The replacement cost is the dollar amount required to reconstruct a property in-kind.

Myth: Appraisers use a formula, like a certain price per square foot, to come to the worth of a house.

Fact: There are many different processes that an appraiser will use to make an in-depth analysis of every factor in consideration of the home, such as the size, location, condition, how close it is to certain facilities and the worth of recently sold comparable houses.

Myth: When the economy is on the rise and the worth of homes are found 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 arrives concerning a specific home is always personalized, based on certain factors found from the information of comparable houses and other considerations within the property itself. It doesn't matter if the economy is doing well or declining.

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

Fact: To find an accurate value beyond all doubt, an appraiser must assess the property on a variety of factors based on location, condition, improvements, amenities, and market trends. An external inspection certainly can't provide all of the information necessary.

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

Fact: Legally, the document is owned by the lending agency unless the lender releases their interest in the document. However, home buyers have to be given a copy of the appraisal report upon written request, under the Equal Credit Opportunity Act.

Myth: There's no point for home buyers to even concern themselves with what the report contains so long as their lending institution is satisfied.

Fact: Only if home buyers look at a copy of their appraisal report can they double-check its accuracy and possibly need to question the result. 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, containing an exorbitant amount 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.