Common myths about appraising

It is mandated by legal agencies that an appraiser needs to be state-licensed to perform appraisals for federally-supported real estate sales in Colorado. Also by law, you are allowed to receive a copy of the finished appraisal report from your lender. Contact us if you have any questions about the appraisal process.

Myth: Assessed value should equate to market value.

Fact: It could be that Colorado, like most states, supports the idea that the assessed value is no different from the market value; however, this is not often the case. Examples include when interior reconstruction has happened and the assessor is unaware of the improvements, or when properties in the vicinity have not been reassessed for an prolonged period of time.

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

Fact: The appraiser has no vested interest in the outcome of the appraisal and should conduct services with independence, objectivity and impartiality - no matter for whom the appraisal is written.

Myth: The replacement value of the home will be is on par with the market value.

Fact: Market value is derived from what a willing buyer would likely pay a willing seller for a certain home, with neither being under pressure to buy or sell. If the house were rebuilt, the dollar amount necessary to do so would be the replacement cost.

Myth: There are specific methods that real estate appraisers use to find the value of a property, like the price per square foot.

Fact: Appraisers make an exhaustive analysis of all factors in consideration to the cost of a property, including its location, condition, size, proximity to facilities and recent costs of comparable properties.

Myth: In a strong economy - when the sales prices of homes in a given region are reported to be appreciating by a certain percentage - the worth of individual properties in the proximity can be expected to appreciate by that same percentage.

Fact: Price appreciation of a certain home has to be determined on an individualized basis, factoring in data on comparable homes and other relevant considerations. It makes no difference whether the economy is powerful or poor.

Myth: The house's exterior is determinate of the actual value of the house; it is unnecessary to do an interior inspection.

Fact: Home worth is determined by a multitude of variables, including - but not limited to - location, condition, improvements, amenities, and market trends. There's no real way to get all of this data from simply viewing the property from the outside.

Myth: Because consumers fund appraisal reports when applying for loans to buy or refinance their house, they own their appraisal.

Fact: The appraisal report is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the document. Consumers must be supplied with a copy of the document through request because of the Equal Credit Opportunity Act.

Myth: There's no need for consumers to even care about what the appraisal contains so long as their lending company is fine with the contents therein.

Fact: A consumer should definitely inspect their appraisal report; there will probably be some questions or some worries with the accuracy of the report that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can serve as a record for the future, as it contains an exorbitant amount of data - including, but certainly 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.