Debunking Appraisal Myths:

Myth 1: Appraisals and Inspections Are the Same Thing

Contrary to popular belief, an appraisal is not the same as a home inspection or engineer inspection. An appraiser is a valuation specialist whose job is to prove an evidence-based opinion of the most likely value of a house based on factors such as location, improvements and current market trends. A home inspector or engineer is a building specialist who focuses on the condition of the home and its major components.

Myth 2: Appraisers use a formula, such as price per square foot, to arrive at the value of a house.

Appraisers make a comprehensive analysis of all factors pertaining to the worth of a property, including its location, condition, size, proximity to facilities and recent costs of comparable homes.

Myth 3: Appraisers Decide a Property’s Value 

It’s a common home appraisal myth, but appraisers neither set home values nor let an agreed-upon purchase price influence their valuation. An appraisal is, simply put, an unbiased opinion of a home’s value. It helps the lender ensure that they’re making a sound financial decision when they choose to extend a loan.

It’s an appraiser’s job to independently develop a credible opinion of the value of the home based on current market trends, recent sales of similar properties, a visual inspection of the home, and other aspects of the home (e.g., amenities, square footage, neighborhood, and more).

Myth 4: Zillow Is As Accurate As An Appraisal

Online estimations like Zillow’s Zestimates are unlikely to provide an accurate estimate of a home’s value. These estimates are based on publicly available data and algorithms built for homogeneous cities, neither of which relate well to our unique real estate market. An appraisal is conducted by trained professionals who physically inspect the property and understand local market trends.

Myth 5: Home Renovations Equal a Dollar-for-Dollar Increase in Home Value

While some renovations may indeed add value to a home, it’s safer not to bet on how much. The true market value of your property is based on what buyers pay for similar houses, in similar areas, in similar conditions. Home improvements rarely increase the value of the home by the amount you paid for them. And some home improvements have a better return than others.