Common myths about appraising
By law, an appraiser is required to be state-licensed to produce appraisals for federally-related sales. Also by law, you are entitled to request a copy of the finished appraisal from your lender. Contact our professional staff if you have any concerns about the appraisal process.
Myth: Assessed value should equate to 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. There are times when interior remodeling has been done and the assessor is unaware of the improvement or other houses in the area have not been reassessed for quite a while, it may vary wildly.
Myth: The buyer or the seller can have some pull in the value of the house 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 report, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is written.
Myth: The replacement cost of the house will be is on par with the market value.
Fact: Without any pressure from any different parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a particular property. Replacement value is the dollar amount necessary to reconstruct a property in-kind.
Myth: Certain formulae, like the price per square foot, are the methods appraisers use to determine the cost of a property.
Fact: Appraisers make an exhaustive analysis of all factors in consideration to the cost of a home, including its location, condition, size, proximity to facilities and recent costs of comparable properties.
Myth: In a powerful economy - when the worth of homes in a given region are reported to be appreciating by a certain percentage - the costs of individual houses in the proximity can be expected to appreciate by that same percentage.
Fact: Any value at which an appraiser concludes concerning a certain house is always individualized, based on certain factors pulled from the data of comparable houses and other considerations within the home itself. It makes no difference if the economy is powerful or on the decline.
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Myth: The property's outside is determinate of the actual worth of the property; it is unnecessary to do an interior appraisal.
Fact: To determine an accurate value beyond all doubt, an appraiser must assess the house on a variety of factors based on area, condition, improvements, amenities, and current market trends. There's no real way to get all of this information from simply looking at the house from the exterior.
Myth: Considering that the consumer is the party who provides the funding to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal report belongs to them.
Fact: Legally, the appraisal is owned by the lending agency unless the lender relinquishes their interest in the document. However, home buyers must be supplied with a copy of the document upon written request, under the Equal Credit Opportunity Act.
Myth: Consumers need not worry about what is in their appraisal document so long as it satisfies the requirements of their lending company.
Fact: It is almost imperative for consumers to look at a copy of their appraisal 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 data contained in an appraisal that should 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 vicinity.
Myth: The only reason someone would order an appraisal is if a house needs its cost estimated in a lender sales transaction.
Fact: Hiring an appraiser can fulfill a variety of needs depending on the designations and certifications of the appraiser involved; appraisers can perform a multitude 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: Appraisal reports have almost nothing in common with a home inspection. The function of an appraisal report is to form an opinion of fair market value during the appraisal process and the production of the appraisal report. A home inspector determines the condition of the building and its main components and reports their findings.