Appraisal myths & facts

By law, an appraiser needs to be state-licensed to produce appraisals for federally-related transactions. The law allows you to get a copy of your finished report from your lending agency after it has been produced. Contact us if you have any concerns about the appraisal process.

Myth: Market value should be the same as the assessed value of the property.

Fact: It might be that Illinois, like most states, supports the common myth that the assessed value equals the market value; however, this is not often the case. At times when interior remodeling has been done and the assessor is unaware of the improvement or other homes in the area have not been reassessed for quite some time, it may vary wildly.

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

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

Myth: Market value should equate to replacement cost.

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 property. Replacement value is the dollar amount necessary to rebuild a house in-kind.

Myth: Appraisers use a calculation, such as a specific price per square foot, to arrive at the value of a house.

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

Myth: In a powerful economy - when the prices of properties in a given county are found to be rising by a particular percentage - the prices of individual properties in the vicinity can be expected to rise by that same percentage.

Fact: Any price at which an appraiser concludes in regards to a specific house is always individualized, based on certain factors found from the information of comparable houses and other specifications within the home itself. It doesn't matter if the economy is doing well or declining.

Myth: The home's outside is determinate of the actual price of the property; there is no need to do an interior appraisal.

Fact: Home worth is concluded by a number of factors, including - but not limited to - location, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from just inspecting the home from the outside.

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

Fact: Legally, the report is owned by the lending agency unless the lender releases their interest in the appraisal. However, consumers must be supplied with a copy of the document upon written request, under the Equal Credit Opportunity Act.

Myth: It doesn't concern consumers what's in the report so long as it satisfies the necessities of their lending company.

Fact: Only if home buyers check out a copy of their appraisal report can they ensure 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, comprised of useful and often-revealing 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 proximity.