Common myths about appraising

It is mandated by law that an appraiser must be state-licensed to offer appraisals for federally-supported home transactions in Kentucky. Also by law, you have the ability to request a copy of the completed appraisal from your lending agency. Contact us if you have any concerns about the appraisal procedure.

Myth: Market value will always be equivocal to the assessed value of the property.

Fact: It is possible that Kentucky, like most states, supports the idea that the assessed value is the same as the market value; however, this is not often the case. Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby homes are prime examples of why the price can vary.

Myth: Depending on if the appraisal is written for the buyer or the seller, the value of the house will vary.

Fact: The value of the home does not affect the salary of the appraiser; due to this, the appraiser has no personal interest in the worth of the house. What this means is he will render services with impartiality and independence regardless for whom the appraisal is conducted.

Myth: Market value should equate to replacement cost.

Fact: Without any influence from any different parties to buy or sell, market value is what a willing buyer would pay a willing seller for a specific home. The dollar amount needed to rebuild a house is what constitutes the replacement cost.

Myth: Appraisers use a calculation, like a specific price per square foot, to come to the value of a home.

Fact: There are many differing methods that an appraiser will use to make an in-depth investigation of every factor in consideration of the home, such as the size, location, condition, how close it is to specific facilities and the value of recently sold comparable houses.

Myth: In a powerful economy - when the worth of houses in a given neighborhood are reported to be rising by a particular percentage - the prices of individual houses in the proximity can be expected to rise by that same percentage.

Fact: Price increase of a certain home has to be concluded on an individualized basis, factoring in information on comparable houses and other relevant specifications within the house itself. It makes no difference whether the economy is strong or on the decline.

Myth: Just seeing what the property looks like on the outside gives a good idea of its worth.

Fact: To conclude an accurate price beyond all doubt, an appraiser must inspect the house on a variety of factors based on area, condition, improvements, amenities, and current market trends. There's no possible way to get all of this information from simply viewing the home from the exterior.

Myth: Because the consumer is the party who provides the money to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal is theirs.

Fact: Unless a lender releases its interest in the document, it is legally owned by the lending agency that ordered the appraisal. Home buyers must be given a version of the report through request due to the Equal Credit Opportunity Act.

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

Fact: It is almost imperative for consumers to peruse a copy of their appraisal so that they can double-check the accuracy of the document, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of information contained in an appraisal that will probably be useful to the home buyer in the future, such as 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.