Appraisal myths & facts
By law, an appraiser is required to be state-licensed to perform appraisals for federally-related purchases. You also have the right to acquire a copy of the finished report from your lender. Contact our professional staff if you have any concerns about the appraisal procedure.
Myth: Assessed value should equate to market value.
Fact: While most states back the suggestion that assessed value is equal to estimated market value, this often is not the case. Examples include when interior reconstruction has happened and the assessor is unaware of the improvements, or when houses in the area have not been reassessed for an prolonged period of time.
Myth: The appraised value of a home will vary depending upon if the appraisal is provided for the buyer or the seller.
Fact: The cost of the home does not affect the pay of the appraiser; because of this, the appraiser has no preconceived interest in the opinion of value of the house. What this means is he will provide job with impartiality and objectivity regardless for whom the appraisal is provided.
Myth: The replacement value of the home should be is on par with the market value.
Fact: Without any suggestion from any outside parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific home. If the house were reconstructed, the dollar amount required to do so would set the replacement cost.
Myth: Certain formulae, such as the price per square foot, are the methods appraisers use to come to the value of a house.
Fact: There are many varied methods that an appraiser will use to make a detailed investigation of every factor in consideration of the house, such as the size, location, condition, how close it is to undesirable facilities and the opinion of value of recently sold comparable properties.
Myth: When the economy is doing well and the cost of houses are found to be increasing by a certain percentage, the other houses in the proximity can be expected to increase based on that same percentage.
Fact: Any value at which an appraiser arrives concerning a certain house is always personalized, based on certain factors pulled from the information of comparable homes and other specifications within the home itself. This is true in fair economic times as well as poor.
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Myth: You can generally see what a property is worth simply by looking at the outside.
Fact: There are a multitude of different factors that determine the value of a house; these factors include location, condition, improvements, amenities, and market trends. An external inspection obviously can't provide all of the information required.
Myth: Because the consumer is the person who puts up the money to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal is theirs.
Fact: Legally, the report is owned by the lender unless the lender relinquishes their interest in the appraisal. Consumers must be provided with a copy of the document upon written request because of the Equal Credit Opportunity Act.
Myth: Home buyers need not care about what is in their report so long as it satisfies the necessities of their lending agency.
Fact: Only if consumers examine a copy of their appraisal report can they verify its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can double as a record for the future, as it contains a great deal of data - including, but not limited to 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.
Myth: There is no reason to order an appraisal unless you are trying to get an estimate of the cost of a house during a sales transaction involving a lending institution.
Fact: Depending upon their qualifications and designations, appraisers can and may provide a series of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal report is the same as a home inspection.
Fact: An appraisal does not serve the same purpose as an inspection. The job of the appraiser is to conclude an opinion of value in the appraisal process and through producing the report. House inspectors will produce a report that will explain the condition of the property and its major components and possible damage.