Some Common Myths and Realities About
Real Estate Appraisals and Appraisers from Colorado Appraisals, Inc.

Myth: "Assessed value of a property should equate to market value."
Reality: While most states support the concept that assessed value approximate estimated market value, this often is true. Some examples:  interior remodeling has occurred but the assessor is unaware of any improvements, or some properties in the area have not been reassessed for an extended period of time.

Myth: "The appraised value of a property will vary, based upon whether the appraisal is carried out for the buyer or the seller."
Reality: The real estate appraiser has no vested interest in the outcome of the appraisal whatsoever, and should render services with independence, objectivity and impartiality - no matter for whom the appraisal is done.

Myth: "Market value should approximate replacement cost."
Reality: Replacement cost is the dollar amount it would take to reconstruct a property in-kind.  Market value is based on what a willing buyer likely would pay a willing seller for a particular property, with neither being under pressure to buy or sell. These two concepts are different, and so the values may also be quite different.

Myth: "Appraisers use a formula to calculate the value of ahome, such as a specific price per square foot."
Reality: Appraisers actually create a detailed analysis of all factors having to do with the value of a home including its location, condition, size, proximity to facilities and recent selling prices for comparable properties or homes.

Myth: "In a good economy, when the sales prices of homes in a given area are reported to be rising by a particular percentage, the value of properties in the area can be expected to appreciate by that same percentage."
Reality: Value appreciation (or depreciation) of any property is determined on an individual basis, factoring in data on comparable properties and other relevant considerations. This is true with good economies as well as bad.

Myth: "You generally can tell what a property is worth simply by looking at the outside."
Reality: Property value is determined by a number of factors, including location, condition, improvements, amenities, and market trends.  Certainly the interior is taken into account when an interior/exterior appraisal is done which may affect the value of the home positively or negatively.

Myth: "Because of the fact that consumers pay for appraisals when applying for loans to purchase or refinance real estate, they own the appraisal."
Reality: The fact on this is that the appraisal is legally owned by the lender - unless the lender "releases its interest" in the document. However, consumers are entitled to a copy of the appraisal report, upon written request, under the Equal Credit Opportunity Act.

Myth: "Consumers do not need to be concerned with what is in the appraisal document so long as it satisfies the needs of their lending institution."
Reality: Only if consumers read a copy of their appraisal can they double-check its accuracy and question the result. Also, it makes a valuable record for future reference, containing useful and often-revealing information - including the legal and physical description of the property, square footage measurements, list of comparable properties in the neighborhood, neighborhood description and information on current real-estate activity and market trends in the area.

Myth: "Appraisers are hired only to estimate real estate property values for property sales that involve mortgage-lending transactions."
Reality: Depending upon their qualifications and designations, appraisers often provide a variety of appraisal services, including advice for estate planning, dispute resolution, zoning and tax assessment review as well as cost/benefit analysis.

Myth: "An Appraisal is the same thing as a home inspection."
Reality: An Appraisal does not serve the same purpose as an inspection, and the actions taken as well as the report are quite different. An appraiser forms an opinion of value in the appraisal process and resulting report.  A home inspector determines the condition of the home and its major components and reports these findings.