Appraisers verify sales with the local municipality, and use Multiple Listing Services (MLS) to see sales reported by real estate agents. People are often vaguely familiar with what an appraisal is, but still there are misconceptions when it comes to the appraisal process.
Here are four common misconceptions that consumers believe about appraisals:
Misconception #1 – Records pulled from city records are 100 percent accurate.
As an appraiser is doing their due diligence on a property, the records are verified by physical measurement and inspection. Sometimes the information on the listing advertisement may be rounded or may not have all information required for an appraisal. Most appraisal reports list the data and verification sources for the physical characteristics of the property being appraised.
Misconception #2 – The appraiser does not have the best information to support their appraisal decision.
In regards to comparable sale information (also called comps), the appraiser holds subscriptions to the same listing services that real estate agents use. This gives the appraiser access to homes that sold, were listed for sale or were once listed and then taken off the market. As the information contained in the listing is often generalized, the appraiser takes this and verifies the data against public records, interviews real estate agents and even inspects the comps for additional verification. In addition to sale and listing information, the appraiser will subscribe to building cost services, real estate rental information services and sometimes paid access to government municipalities to be able to verify public record information according to their state licensing standards.
Misconception #3 – Online real estate websites always have accurate information.
On most real estate websites, the actual sale information is not available to the public, including details of the transaction. Although this information can be useful to the consumer, the appraiser cannot rely on the information without having the complete picture. This also can create confusion for the consumer because often times the information reported by the appraiser can differ widely from the information that exists on public internet sites.
Misconception #4 – The appraiser must always inspect the home by walking through it.
As mentioned in a previous blog post on drive-by appraisals, an appraiser isn’t always mandated to walk around the home. In fact, appraisals can vary in depth greatly. A full inspection is as detailed as it gets. The appraiser will walk through each room of the home and inspect the exterior. One the other end of the spectrum is the drive-by appraisal. It’s the least in-depth appraisal and can be ordered when a “ball park estimate” is acceptable.
Appraisals are incredibly intricate and as complicated as it can get when it comes to the real estate industry. In today’s world through leveraging technology and specialization, we have reduced the turn time for a property appraisal, but this is only the tip of the iceberg when it comes to the appraisal process. Keep your eyes peeled for a day in the life of an appraiser, which we will discuss next week.