At The Appraisal Foundation, we often encounter misperceptions about the role of appraisals in the home buying process. From first time homebuyers to seasoned real estate professionals, there is often confusion about the purpose of an appraisal, how it is ordered and carried out, and what type of communication is allowed with appraisers. Dispelling these misunderstandings is critical to educating borrowers, lenders, real estate brokers, and homebuilders on the central role of appraisals in the mortgage process. That's why we decided to compile the most common myths that we hear from these different groups – and set the record straight.
Despite the belief of many borrowers, appraisers neither set the value of a home nor confirm a home's sale price. They produce a credible opinion of value based on thorough and unbiased research and analyses that reflects the market value of a property. This is an important lesson for homeowners and sellers to absorb, especially if they're considering making renovations to their home, which do not always translate dollar-for-dollar into a higher appraisal.
It's also vital for these groups to grasp the numerous protections in place that ensure appraisers remain independent and objective. This does not, however, prevent relevant communication between appraisers, lenders, and real estate brokers, another common myth we hear.
Demystifying the appraisal process is an important step for all parties involved in the mortgage process. Whether it is a family looking to buy their first home or a real estate professional with years of experience, misunderstandings only complicate the home buying process. Those of us in the appraisal profession should be proactive in debunking these myths and explaining our important role.
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