Common myths about appraising
Legally, a real estate appraiser is required to be state certified to create substantiated real estate appraisals for federally-related sales. Also by law, you are entitled to request a copy of the finished report from your lending agency. Contact us if you have any concerns about the appraisal procedure.
Myth: Assessed value should always be equal to market value.
Fact: While most states uphold the concept that assessed value equates estimated market value, this often is not the case. Interior reconstruction that the assessor has not investigated and a lack of reassessment on nearby properties are excellent examples of why this occurs.
Myth: The buyer or the seller may have leverage in the cost of the property depending upon for whom the appraiser is working.
Fact: There is no personal interest on the part of the appraiser in the result of the appraisal, therefore he will conduct his work with impartiality and independence, despite for whom the appraisal is ordered.
Myth: Any time market value is found, it should be the same as the replacement cost of the home.
Fact: The way market value is found is based on what a home buyer would be willing to pay a willing seller for a house without being under influence from any external party to purchase or sell. If the property were reconstructed, the dollar amount needed to do so would make up the replacement cost.
Myth: Specific methods, such as the price per square foot of the property, are what appraisers use to arrive at the price of a property.
Fact: Appraisers complete a comprehensive analysis of all factors pertaining to the price of a home, including its location, condition, size, proximity to facilities and recent worth of comparable properties.
Myth: In a strong economy - when the costs of houses in a given region are found to be appreciating by a certain percentage - the costs of individual homes in the vicinity can be expected to increase by that same percentage.
Fact: Any cost at which an appraiser concludes concerning a certain home is always individualized, based on certain factors derived from the information of comparable properties and other considerations within the house itself. This is true in strong economic times as well as bad.
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Myth: Just examining what the house looks like on the outside gives an idea of its value.
Fact: To determine an accurate worth beyond all doubt, an appraiser must assess the home on a variety of factors based on area, condition, improvements, amenities, and market trends. Obviously, none of these variables can be found just by looking at the house from the exterior.
Myth: Because consumers fund the appraisal when applying for loans to buy or refinance their home, they own their appraisal report.
Fact: Legally, the document is owned by the lender unless the lender releases their interest in the report. Consumers have to be supplied with a copy of the document upon written request because of the Equal Credit Opportunity Act.
Myth: It doesn't concern consumers what's in the report so long as it satisfies the requirements of their lending agency.
Fact: It is almost imperative for consumers to look at a copy of their appraisal report so that they can double-check the accuracy of the report, in case there is a need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes a valuable record for future reference, comprised of useful and often-revealing information - including 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 proximity.
Myth: The only reason someone would hire an appraiser is if a home needs its worth assessed in a lender sales transaction.
Fact: Appraisers can have many varied qualifications and designations which allow them to provide a series of different services including - but definitely not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost 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. An appraiser forms an opinion of value in the appraisal process and resulting report. House inspectors will write a report that will express the condition of the home and its major components and possible damage.