Some Myths and Realities About
Real Estate Appraisals and Appraisers
Myth: Assessed value is the same as market value.
Reality: Unlikely. While most states support the concept that a property's equalized assessed value should approximate estimated market value, this is often not the case. An assessment value is arrived at by applying a town-wide statistical analysis, which is fine tuned for individual properties.
The longer since a town-wide re-assessment, the more likely that market value and assessed value will diverge.
Myth: The appraised value of a property will vary, depending upon who is the appraiser's client.
Reality: False. The appraiser has no vested interest in the outcome of the appraisal and should render services with independence, objectivity and impartiality - no matter whom the appraisal is conducted.
Myth: Market value and insurance/replacement cost are the same thing.
Reality: False. 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. Replacement cost is the dollar amount required to reconstruct a property of similar utility.
Myth: Appraisers use a formula, such as a specific price per square foot, to figure out the value of a home.
Reality: Untrue. Appraisers make a detailed analysis of all factors pertaining to the value of a home including its location, condition, size, proximity to facilities and recent sale prices of comparable properties
Myth: In a robust economy - when the sales prices of homes in a given area are reported to be rising by a particular percentage - the value of individual properties in the area can be expected to appreciate by that same percentage.
Reality: No. Different neighborhoods and property types within a region or municipality are unlikely to appreciate or depreciate uniformly.
Myth: Appraisers are hired only to estimate the market value of properties for sale, or for re-financing.
Reality: No. First of all, professional appraisers do not estimate value -- we provide knowledgeable and credible value opinions. Depending upon their qualifications and designations, appraisers can and do provide a variety of services, including valuation for: estate planning, estate taxation, estate disposition, trusts, IRS charitable donations, and private party purchases.