Appraisal myths & facts
By law, an appraiser is required to be state-licensed to produce appraisals for federally-related purchases. You are also entitled by law to request a copy of the completed appraisal report from your lending agency. Contact James Earp Appraisal Service if you have any questions about the appraisal process.
Myth: Market value needs to be equivocal to the assessed value of the property.
Fact: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. Examples include when interior reconstruction has happened and the assessor has not seen the improvements, or when homes in the vicinity have not been reassessed for an prolonged period of time.
Myth: Depending on whether the appraisal is done for the buyer or the seller, the value of the house will vary.
Fact: There is no personal interest on the part of the appraiser in the outcome of the report, therefore he will complete his work with impartiality and independence, regardless for whom the appraisal is written.
Myth: The replacement cost of the property is always is on par with the market value.
Fact: Without any pressure from any external parties to buy or sell, market value is what a willing buyer would pay an interested seller for a particular home. The dollar amount needed to reconstruct a house is what constitutes the replacement cost.
Myth: There are specific methods that real estate appraisers use to determine the cost of a home, like the price per square foot.
Fact: Appraisers complete an exhaustive analysis of all factors pertaining to the worth of a home, including its location, condition, size, proximity to facilities and recent opinion of value of comparable properties.
Myth: In a powerful economy - when the prices of houses in a given neighborhood are reported to be increasing by a particular percentage - the worth of individual properties in the area can be expected to rise by that same percentage.
Fact: All increase of price is on a one-on-one basis, determined by information on relevant conditions and the data of comparable homes. It doesn't matter if the economy is doing well or declining.
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Myth: The home's outside is determinate of the actual worth of the property; there is no need to do an interior appraisal.
Fact: There are a number of different factors that conclude property value; these factors include location, condition, improvements, amenities, and market trends. As you can see, none of these variables can be found simply by viewing the home from the outside.
Myth: Since you're the one paying for the appraisal when applying for your loan to purchase or refinance your house, you own the produced appraisal report.
Fact: Legally, the appraisal report is owned by the lender unless the lender releases their interest in the report. Home buyers must be given a version of the report upon written request due to the Equal Credit Opportunity Act.
Myth: There's no reason for home buyers to even worry about what the appraisal contains so long as their lender is fine with the contents therein.
Fact: Only if consumers read a copy of their report can they ensure its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of information stored in an appraisal that can be useful to the home buyer in the future, such as 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 region.
Myth: There is no reason to hire an appraiser unless you are trying to get an estimate of the price of a home during a sales transaction involving a lending company.
Fact: Depending upon their qualifications and designations, appraisers can and may provide a lot of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: You don't need to get an appraisal if you have had a home inspection.
Fact: A home inspection serves a completely different purpose than an appraisal report. The reason behind an appraisal is to conclude upon an opinion of fair market value during the appraisal process and the production of the report. House inspectors will create a report that will explain the condition of the property and its major components and possible damage.