Appraisal Myths - let's debunk them!
Myth #1: It’s easy
Despite common belief, appraisal assignments are varied, challenging, and complex. Rarely do appraisers encounter cookie-cutter houses with abundant comparable properties that are “easy” to appraise. Many people don’t realize that several additional hours that go into completing an appraisal beyond the relatively short time it takes to complete the onsite appraisal inspection.
“A borrower commented after my observation of the subject, ‘Wow that’s it?! I should become an appraiser.'”
Myth #2: Appraisers determine or “make” property value
“Many clients blame us for creating their increasing and decreasing values. This is not true. The buyers and sellers create these values by their actions in the market.”
“The appraiser’s job is to find the objective market value based on the condition of the home.”
Myth #3: Appraised value = market value or price per square foot
“Appraisals are not the result of exact science, it’s an opinion of the value of the home. This has nothing to do with what the buyer will pay or what the seller should accept.”
“Most homeowners think price per square foot equals value.”
“Realtors use price per square foot, and most owners are stunned if value is below what is expected because they hear from realtors and news articles that all the stats on home values are with data on price per square foot."
Myth #4: Appraisal inspection = property inspection
“A home inspector’s job is to uncover things that are problematic or could potentially become problems with the residence, while the appraiser’s job is to find the objective market value of the property. Totally different reports with different objectives.”
“Although appraisers do an ‘inspection’ of the home we are not trained as a home inspector. The appraisal inspection only reports what can be seen and how it relates to comparable homes in the market. An appraiser does not test for functionality of systems and cannot determine the potential hazards or malfunctions that a licensed home inspector can. It is always a good recommendation for a home inspection to be done prior to purchase.”
Myth #5: There’s a shortage of appraisers
There has been quite a bit of debate over the past few years as to whether the appraiser shortage is myth or fact. One appraiser speculates, “This is a myth created by the AMCs. It helps them cover their butts when a report doesn’t come in on time.”
More myths about appraisal
In addition to the five most popular answers listed above, here are some additional myths that members of our appraisal community pointed out:
“Many people believe we relay our results to municipalities which in turn can affect property taxes.”
“That a single appraisal is the same as an assessment for taxes, or that they should be equal.”
“That appraisers can magically locate comparable sales that will justify the purchase price/re-finance amount.”
“That we get paid what the borrower has paid for the appraisal.”
That a real estate agent can complete an appraisal.
That an appraiser works for the buyer.
That the “appraiser is able to estimate the value up to the dollar.”
“That it takes little education/experience to become certified.“
(cite: McKissock Training)