Q A Z Z O O . C O M

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Recently I came across an article regarding common appraisal myths in the home buying process. Some of the most common appraisal myths are listed below.

Lenders:

appraisal2Myth: A lender and an appraiser cannot communicate before, during or after an appraisal is complete.

Fact: Not only are lenders permitted to talk to appraisers, they must!

Myth: Nothing can be done if a lender has concerns or questions regarding a completed appraisal.

Fact: There are plenty of steps a lender can take if they have concerns or questions regarding a completed appraisal.

Myth: Lenders must use an Appraisal Management Company (AMC) to order an appraisal.

Fact: an AMC can be used, but is not required, however the lender cannot influence the value of a home.

 

Borrowers:

Myth: An appraiser is hired by the borrower.

Fact: Appraisers are hired by lenders.

Myth: The money put into a home translates dollar for dollar into a higher appraisal.

Fact: A home improvement project can add value to a home, however it can also subtract value from a home, and the value is calculated by what they market is willing to pay for that improvement.

Myth: Appraisers set the value of a home.

Fact: Appraisers do not set the value or the sale price, they create a credible opinion of the value of the home in the current market.

Myth: Appraisers and home inspectors perform the same function.

Fact: An appraiser provides an objective, unbiased analysis so the lender and better understand the value of the property. An inspector is hired by the borrower and performs an objective visual examination of the physical structure and systems of a house to ensure structural integrity.

 

Real Estate Brokers:

appraisalMyth: Real estate brokers are prohibited from communicating with appraisers.

Fact: Brokers are permitted to communicate with an appraiser to exchange relevant information on a property.

Myth: Nothing can be done if a broker has concerns or questions regarding a completed appraisal.

Fact: There are plenty of steps a broker can take if they have concerns or questions regarding a completed appraisal.

Myth: Appraisers request copies of the purchase agreement from brokers simply so they’ll know how much to appraise the home for.

Fact: Appraisers are required to review the purchase agreement to fully understand the terms of the transaction, they supply their own opinion of value.

 

Homebuilders:

Myth: Homebuilders are prohibited from communicating with appraisers.

Fact: Homebuilders are permitted to communicate with an appraiser to exchange relevant information on a property.

Myth: Nothing can be done if a builder has concerns or questions regarding a completed appraisal.

Fact: There are plenty of steps a homebuilder can take if they have concerns or questions regarding a completed appraisal.

Myth: Appraisers only rely on comparable sales and do not take into account the cost to build a home.

Fact: Appraisers do consider the cost to build a home and must perform a cost approach to deliver a credible appraisal. However, cost does not equal value, so appraisers must determine through research and analysis what the marketplace is willing to pay.

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