Some Myths and Realities About
Real Estate Appraisals and Appraisers

Myth: Assessed value should equate to market value.
Reality: Arizona's county assessors support the concept that assessed value should equal market value. However, this often is NOT the case. That's why Arizona has an administrative review of real property valuation available for you to protest the assessor's opinion of your full cash value.

Myth: The appraised value of a property will vary, depending upon whether the appraisal is conducted for the buyer or the seller.
Reality: I have no vested interest in the outcome of the appraisal and will render services with independence, objectivity and impartiality - no matter for whom the appraisal is conducted. No exceptions!

Myth: Market value should approximate replacement cost.
Reality: 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 in-kind, and that cost is not always the same as market value. For example, a swimming pool contributes a varying percentage of its cost of construction, depending on specific market data. I've seen a large pool detract from value of a small townhouse in a low price range, and I've seen a pool contribute more than its cost in the upper prices ranges.

Myth: Appraisers use a formula, such as a specific price per square foot, to figure out the value of a home.
Reality: I complete a detailed analysis of all factors pertaining to the value of a home including its location, condition, size, proximity to facilities, quality of construction and recent sale prices of comparable properties. Buying a house by the square foot would be similar to buying a car by the pound. The price per square foot is ONLY one tool used to arrive at an opinion of value.

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: 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.

Myth: You generally can tell what a property is worth simply by looking at the outside.
Reality: Property value is determined by a number of factors, including location, condition, improvements, amenities, and market trends. So, no, I cannot tell what a property is worth from only looking at the outside.

Myth: Because consumers pay for appraisals when applying for loans to purchase or refinance real estate, they own their appraisal.
Reality: In cases that a lender orders the appraisal, it is, in fact, legally owned by the lender - unless the lender "releases its interest" in the document. However, consumers must be given a copy of the appraisal report, upon written request, under the Equal Credit Opportunity Act. If you specifically request being named as an "intended user" in my appraisal reports, you too own the appraisal you pay for.

Myth: Consumers need not be concerned with what is in the appraisal document so long as it satisfies the needs of their lending institution.
Reality: 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. That's why you should specifically request being added as one of the appraisal's "intended users".

Myth: Appraisers are hired only to estimate real estate property values in property sales involving mortgage-lending transactions.
Reality: Due to my qualifications and experience, I can and do provide a variety of services, including advice for estate planning, dispute resolution (divorce, expert testimony in court) and pre-listing for sale purposes.

Myth: An Appraisal is the same as a home inspection.
Reality: An Appraisal does NOT serve the same purpose as an inspection. I form an opinion of value in the appraisal process and report that value in a resulting report. A home inspector determines the condition of the home and its major components and reports these findings. My reports assume there is no hidden defect. If you are concerned about physical condition it is essential that you order a home inspection, preferably from a member of ASHI, the home inspectors' professional society.

If you have a specific question about any aspect of real estate or real estate appraisals, email your question to me at ricardosmall@Q.com or call me at 1-520-647-7112.