Common Appraisal Myths Dispelled

The appraisal process is one of the key components in any home sale. A real estate appraisal is an expert valuation of a house and the property it is located on. Although appraisals are widely used to determine the true value of a property in the event of a home sale or mortgage refinance, there are many misconceptions surrounding them. Today we are dispelling these common appraisal myths. 

Home Appraisal = Home Inspection

Many people confuse the functions of a home appraisal and a home inspection. A home appraisal is the valuation of the property and home, a home inspection is an examination that determines the condition of the home.

The More Updated the Home, The Higher The Value

This may be one of the biggest misconceptions about residential appraisals. Many homeowners “prepare” their homes by sprucing up their landscaping and making sure their house is meticulously cleaned. However, while these items do make a home show well, they don’t necessarily change the property value.

Updated Maintenance Items Will Increase Value

It can be very costly to maintain a home. Updating major systems in a home such as heating and air units or a hot water heater can cost thousands. Some other costly expenses are replacing the roof or updating windows. Homeowners want to see that the money they spent on these big-ticket items will directly translate into a higher appraised value. However, the truth is, these items don’t increase the value of a home, they just keep the value from depreciating.

The Appraiser Works for a Particular Entity (Buyer, Seller, or Bank)

An appraiser is an independent third-party professional who is not looking out for the interests of any parties involved. They are simply determining the value of the property and home in relation to the current market conditions.

Appraisal Calculations

Appraisals are most commonly used to determine the loan to value on a property. They are also used to determine the amount of equity that is in the home.

Confused? There is a lot that goes into a real estate transaction and I would be happy to clear up any questions you have. Reach out!