Appraisal myths & facts
It is required by the government that an appraiser is required to be state-licensed to perform appraisals for federally-supported real estate sales in North Carolina. The law gives you the right to get a copy of your finished appraisal from your lending agency after it has been provided. Contact James Earp Appraisal Service if you have any questions about the appraisal process.
Myth: Market value has to be similar to the assessed value of the property.
Fact: It is probable that North Carolina, like most states, validates the idea that the assessed value is no different from the market value; however, this certainly varies based on state-to-state. Interior reconstruction that the assessor has not investigated and a dearth of reassessment on nearby houses are perfect examples of why there might be a differential in price.
Myth: Depending on if the appraisal is ordered for the buyer or the seller, the appraised value of the property will vary.
Fact: The opinion of value of the home does not affect the salary of the appraiser; as such, the appraiser has no pressured interest in the opinion of value of the home. What this means is he will provide services with impartiality and objectivity regardless for whom the appraisal is created.
Myth: Any time market value is found, it should equal the replacement cost of the house.
Fact: The way market value is derived is based on what a buyer would be willing to pay a willing seller for a house without being under duress from any external party to buy or sell. The dollar amount required to reconstruct a house is what constitutes the replacement cost.
Myth: There are certain methods that appraisers use to determine the value of a house, like the price per square foot.
Fact: There are many varied calculations that an appraiser will use to make an in-depth investigation of every factor in consideration of the house, such as the size, location, condition, how close it is to specific facilities and the opinion of value of recently sold comparable properties.
Myth: When the economy is on the rise and the sales prices of houses are reported to be appreciating by a certain percentage, the other homes in the proximity can be expected to appreciate based on that same percentage.
Fact: Price increase of a certain property has to be determined on a case-by-case basis, factoring in information on comparable homes and other relevant elements. It makes no difference whether the economy is robust or poor.
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Myth: Just seeing what the house looks like on the outside gives a good idea of its value.
Fact: There are a multitude of different factors that determine property value; these factors include location, condition, improvements, amenities, and market trends. As you can see, none of these things can be found simply by inspecting the property from the exterior.
Myth: Since you're the one providing the money for the appraisal when applying for your loan to purchase or refinance real estate, you own the ordered appraisal.
Fact: The appraisal report is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the appraisal report. Consumers must be provided with a version of the document through request because of the Equal Credit Opportunity Act.
Myth: There's no point for consumers to even worry about what the appraisal contains so long as their lending institution is satisfied.
Fact: A home buyer should definitely inspect their appraisal; there will probably be some questions or some worries with the accuracy of the appraisal that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of information contained in an report that could 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 area.
Myth: The only reason someone would hire an appraiser is if a property needs its cost estimated in a lender-based sales transaction.
Fact: Hiring an appraiser can fulfill a variety of requirements depending on the designations and certifications of the appraiser involved; appraisers can perform a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: An appraisal is no different than a home inspection report.
Fact: An appraisal report does not serve the same purpose as an inspection. An appraiser decides upon an opinion of value in the appraisal process and resulting appraisal. A home inspector determines the condition of the property and its major components and reports their findings.