Appraisal myths & facts
By law, an appraiser must be state-licensed to produce appraisals for federally-related purchases. Also by law, you have the ability to demand a copy of the completed appraisal from your lender. Contact our professional staff if you have any questions about the appraisal process.
Myth: Assessed value should always be the same as to market value.
Fact: While most states uphold the idea that assessed value is the same as estimated market value, this usually is not the case. Examples include when interior reconstruction has occurred and the assessor is unaware of the improvements, or when houses in the area have not been reassessed for an prolonged period.
Myth: The buyer or the seller will have some pull in the cost of the property depending upon for whom the appraiser is working.
Fact: The appraiser has no vested interest in the outcome of the report and should complete his task with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: The replacement value of the property will be is on par with the market value.
Fact: The way market value is found is based on what a home buyer would likely pay a willing seller for a property without being under pressure from any external party to purchase or sell. If the house were rebuilt, the dollar amount necessary to do so would make up the replacement cost.
Myth: There are certain ways that appraisers use to show the opinion of value of a home, such as the price per square foot.
Fact: There are many varied formulae that an appraiser will use to make a full investigation of every factor in consideration of the home, such as the size, location, condition, how close it is to undesirable facilities and the worth of recently sold comparable homes.
Myth: As properties appreciate by a specific percentage - in a robust economic state - the properties within the same neighborhood are figured to increase by the same amount.
Fact: Cost appreciation of a specific home is always concluded on a case-by-case basis, factoring in data on comparable properties and other relevant considerations. This is true in good economic times as well as bad.
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Myth: The house's outside is determinate of the actual value of the home; there is no need to do an interior inspection.
Fact: To find an accurate value beyond all doubt, an appraiser must examine the property on a variety of factors based on area, condition, improvements, amenities, and market trends. Obviously, none of these factors can be derived just by examining the property from the outside.
Myth: Since you're the one coughing up the cash for the appraisal when applying for the loan to buy or refinance your home, you own the provided appraisal report.
Fact: Legally, the document is owned by the lending agency unless the lender relinquishes their interest in the document. Under the Equal Credit Opportunity Act, any home buyer asking for a copy of the document must be provided with it by their lending agency.
Myth: There's no reason for consumers to even worry about what the report contains so long as their lending company is fine with the contents therein.
Fact: Only if consumers examine a copy of their 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. There is a wealth of information contained in an 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 estimate home values in house sales involving mortgage-lending deals.
Fact: Based upon their qualifications and designations, appraisers can and will provide a lot of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A home inspection serves the same purpose as an appraisal.
Fact: An appraisal report does not fulfill the same purpose as an inspection report. The task of the appraiser is to form an opinion of value in the appraisal process and through producing the report. House inspectors will create a report that will show the condition of the home and its major components and possible damage.