Appraisal myths & facts

It is enforced by the government that a real estate appraiser needs to be state-licensed to offer appraisals for federally-related real estate sales in Oklahoma. The law gives you the right to acquire a copy of your completed report from your lending agency after it has been provided. Contact us if you have any concerns about the appraisal process.

Myth: Assessed value will always be the same as to market value.

Fact: This is not often the case; most states do support the concept that the assessed value is the same as market value, but not always. Interior reconstruction that the assessor has not investigated and a lack of reassessment on nearby properties are prime examples of why this occurs.

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

Fact: There is no personal interest on the part of the appraiser in the outcome of the appraisal report, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is ordered.

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

Fact: Without any suggestion from any different parties to buy or sell, market value is what a willing buyer would pay a willing seller for a particular house. Replacement cost is the dollar amount necessary to reconstruct a house in-kind.

Myth: Appraisers use a formula, like a specific price per square foot, to figure out the worth of a house.

Fact: There are many different processes that an appraiser will use to make a detailed analysis of every factor pertaining to the property, such as the size, location, condition, how close it is to undesirable facilities and the value of recently sold comparable properties.

Myth: In a robust economy - when the prices of homes in a given area are found to be appreciating by a particular percentage - the values of individual homes in the proximity can be expected to rise by that same percentage.

Fact: Price increase of a specific property has to be concluded on a case-by-case basis, factoring in data on comparable properties and other relevant elements. It makes no difference if the economy is good or terrible.

Myth: Just examining what the property looks like on its exterior gives an idea of its cost.

Fact: There are a number of different factors that determine property value; these factors include location, condition, improvements, amenities, and market trends. An external inspection obviously can't provide all of the information required.

Myth: Since you're the one funding for the appraisal report when applying for the loan to purchase or refinance your home, you own the provided appraisal.

Fact: The appraisal is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the document. Under the Equal Credit Opportunity Act, any home buyer asking for a copy of the report must be provided with it by their lending agency.

Myth: It doesn't mean anything to consumers what's in the appraisal so long as it meets the requirements of their lending company.

Fact: It is a very good idea for home buyers to go through a copy of their appraisal so that they can verify 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. Also, the appraisal report makes an invaluable record for future reference, containing helpful and often-revealing information - including 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.