Appraisal myths & facts

It is enforced by the government that a real estate appraiser is required to be state-licensed to write appraisal reports for federally-supported property purchases in Michigan. You have the ability to request a copy of the finished 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 exactly the same as the market value.

Fact: It might be that Michigan, like most states, supports the suggestion that the assessed value is the same as the market value; however, this certainly varies based on state-to-state. There are times when interior remodeling has been done and the assessor is unaware of the improvement or other houses in the neighborhood have not been reassessed for a good length of time, it may vary wildly.

Myth: The value of a property will differ depending upon whether the appraisal is provided for the buyer or the seller.

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

Myth: Market value should equate to replacement cost.

Fact: Market value is derived from what a willing buyer would likely pay a willing seller for a certain home, with neither being under undue influence to buy or sell. The replacement cost is the dollar amount necessary to rebuild a property in-kind.

Myth: There are specific ways that real estate appraisers use to determine the cost of a property, like the price per square foot.

Fact: There are many differing calculations that an appraiser will use to make a full analysis of every factor in consideration of the home, such as the size, location, condition, how close it is to certain facilities and the value of recently sold comparable properties.

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

Fact: Cost appreciation of a specific property has to be concluded on an individualized basis, factoring in data on comparable homes and other relevant considerations. This is true in fair economic times as well as bad.

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

Fact: There are a number of different variables that determine property value; these factors include location, condition, improvements, amenities, and market trends. As you can see, none of these variables can be found just by viewing the house from the outside.

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

Fact: Unless a lender releases its interest in the report, it is legally owned by the lending agency that ordered the appraisal. Because of the Equal Credit Opportunity Act, any consumer demanding a copy of the report must be provided with one by their lending agency.

Myth: Consumers need not worry about what is in their report so long as it exceeds the needs of their lending company.

Fact: Only if home buyers check out 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. Also, the appraisal makes an invaluable record for future reference, filled with useful and often-revealing information - 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.