Many times assumptions are made regarding real estate appraisal and property valuation in general. These assumptions are oftentimes incorrect and misleading to those who would benefit from attaining a professional, licensed/certified real estate appraiser to execute a complete appraisal.
ASSUMPTION: The appraised value of a property will vary, depending upon whether the appraisal
is conducted for the buyer or the seller.
FACT: The appraiser has no vested interest in the outcome of the appraisal and should render
services with independence, objectivity and impartiality.
ASSUMPTION: Appraisers are hired only to estimate real estate property values in property
sales involving mortgage-lending transactions.
FACT: Depending upon their qualifications and designations, appraisers can and do provide a
variety of services, including advice for estate planning, dispute resolution, zoning and tax
assessment review and cost/benefit analysis.
ASSUMPTION: Market value should approximate replacement cost.
FACT: Market value is based on what a willing buyer would likely 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 in-kind.
ASSUMPTION: Assessed value should equate to market value.
FACT: While most states support the concept that assessed value approximates estimated
market value, this often is not the case. Situations in which interior remodeling has occurred and
the assessor is unaware of the improvements; or when properties in the vicinity have not been reassessed for an extended period, often result in a higher market value.
ASSUMPTION: Appraisers use a formula, such as a specific price per square foot, to figure out
the value of a home.
FACT: 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 in the subject market area.
ASSUMPTION: Because consumers pay for appraisals when applying for loans to purchase or
refinance real estate, they own their appraisal.
FACT: The appraisal is, in fact, legally owned by the lender - unless the lender "releases its
interest" in the document. However, consumers may obtain a copy of the appraisal report from
their lender who had ordered the report under the Equal Credit Opportunity Act.
ASSUMPTION: 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.
FACT: Value appreciation of a specific property must be determined on an individualized basis,
factoring in data on comparable properties and other relevant considerations. This is true in good
times as well as bad.
ASSUMPTION: Consumers need not be concerned with what is in the appraisal document so
long as it satisfies the needs of their lending institution.
FACT: 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 a narrative of current real-estate activity and/or market trends in the vicinity.
ASSUMPTION: An Appraisal is the same as a home inspection.
FACT: An appraisal does not serve the same purpose as an inspection. The Appraiser forms an
opinion of value during the appraisal process and in the resulting report. A home inspector
determines the condition of the home and its major components and reports these findings.
ASSUMPTION: You generally can tell what a property is worth simply by looking at the outside.
FACT: Property value is determined by a number of factors, including location, condition,
improvements, amenities and market trends.
Absolute Value, Inc.
745 Atlantic Avenue, 8th Floor
Boston, MA 02111
(p) 617.391.0000 (f) 617.507.7909