Common myths about appraising
By law, an appraiser must be state-licensed to perform appraisals for federally-backed purchases. Also by law, you are entitled to receive a copy of the finished appraisal report from your lending agency. Contact James Earp Appraisal Service if you have any concerns about the appraisal process.
Myth: The value that is assessed by the appraiser must be the same as the market value.
Fact: This is not often the case; most states do support the concept that the assessed value is the same as market value, but not always. Interior remodeling that the assessor is not aware of and a lack of reassessment on nearby houses are exact examples of why there might be a differential in price.
Myth: The value of a home will differ depending upon whether the appraisal is ordered for the buyer or the seller.
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, no matter for whom the appraisal is ordered.
Myth: Market value should equate to replacement cost.
Fact: Market value is derived from what a willing buyer would likely pay a willing seller for a certain property, with neither being under pressure to buy or sell. The replacement cost is the dollar amount needed to reconstruct a home in-kind.
Myth: Appraisers use a formula, such as a specific price per square foot, to figure out the cost of a house.
Fact: Appraisers complete a full analysis of all factors in consideration to the worth of a property, including its location, condition, size, proximity to facilities and recent values of comparable homes.
Myth: As houses increase their worth by a specific percentage - in a strong economic state - the homes in proximity are expected to increase by the same amount.
Fact: Any price at which an appraiser arrives in regards to a particular home is always personalized, based on certain factors found from the information of comparable properties and other considerations within the home itself. This is true in excellent economic times as well as poor.
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Myth: The home's outside is determinate of the actual price of the property; it is unnecessary to do an interior appraisal.
Fact: Home worth is concluded by a multitude of factors, including area, condition, improvements, amenities, and market trends. Obviously, none of these variables can be derived just by inspecting the home from the exterior.
Myth: Because consumers fund appraisal reports when applying for loans to purchase or refinance their property, they own their appraisal.
Fact: The appraisal report is, in fact, legally owned by the lending company - unless the lender "relinquishes its interest" in the appraisal. However, consumers have to be supplied with a copy of the report upon written request, due to the Equal Credit Opportunity Act.
Myth: There's no need for consumers to even worry about what the appraisal report contains so long as their lender is satisfied.
Fact: It is a very good idea for consumers to go through a copy of their appraisal report so that they can double-check the accuracy of the report, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of information contained in an appraisal report that will probably be useful to the consumer 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 vicinity.
Myth: Appraisals are ordered only to assess real estate property values in home sales involving mortgage-lending deals.
Fact: Appraisers can have many different qualifications and designations which allow them to perform a series of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: There's no need to get an appraisal if you get a home inspection.
Fact: An appraisal does not serve the same purpose as an inspection report. The function of an appraisal is to arrive at an opinion of fair market value during the appraisal process and the production of the appraisal report. The point of a home inspector is to determine the condition of the property and its main components, then provide a report on these findings.