Appraisal myths debunked
By law, an appraiser needs to be state-licensed to offer appraisals for federally-supported transactions. You are also entitled by law to receive a copy of the completed appraisal report from your lender. Contact our professional staff if you have any questions about the appraisal procedure.
Myth: Assessed value should be the same as to market value.
Fact: This usually isn't true; most states do support the suggestion that the assessed value is the same as market value, but not always. Examples include when interior reconstruction has happened and the assessor does not know about the improvements, or when homes in the vicinity have not been reassessed for an extended time.
Myth: The opinion of value of a home will vary depending upon whether the appraisal is produced for the buyer or the seller.
Fact: The appraiser has no personal interest in the outcome of the appraisal and should render his job with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Market value will equal replacement cost.
Fact: The way market value is derived is based on what a home buyer would be willing to pay a willing seller for a property without being under influence from any external group to purchase or sell. The dollar amount needed to reconstruct a property is what constitutes the replacement cost.
Myth: Specific methods, like the price per square foot of the property, are the ways appraisers use to ascertain the cost of a property.
Fact: Appraisers complete a full analysis of all factors pertaining to the cost of a property, including its location, condition, size, proximity to facilities and recent worth of comparable homes.
Myth: When the economy is robust and the sales prices of properties are found to be increasing by a certain percentage, the other houses in the vicinity can be expected to appreciate based on that same percentage.
Fact: Any price at which an appraiser concludes concerning a certain house is always personalized, based on certain factors concluded from the data of comparable homes and other specifications within the house itself. It doesn't matter if the economy is doing well or declining.
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Myth: Just examining what the house looks like on its exterior gives an excellent idea of its value.
Fact: To conclude an accurate value beyond all doubt, an appraiser must assess the home on a variety of factors based on location, condition, improvements, amenities, and current market trends. There's no possible way to get all of this information from simply looking at the house from the exterior.
Myth: Because consumers fund appraisal reports when applying for loans to buy or refinance their house, they legally own their appraisal.
Fact: Unless a lender releases its vestment in the document, it is legally owned by the lending agency that purchased the appraisal. Consumers must be given a copy of the report through request because of the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the report so long as it satisfies the needs of their lender.
Fact: A consumer should definitely read through their document; there may be some questions or some concerns about the accuracy of the report that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of data stored 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 region.
Myth: There is no reason to hire an appraiser unless you are trying to get an estimate of the worth of a home during a sales transaction involving a lending agency.
Fact: Depending upon their qualifications and designations, appraisers can and do provide a multitude of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal report is no different than a home inspection report.
Fact: A home inspection has a completely different purpose than an appraisal. The reason behind an appraisal report is to conclude upon an opinion of fair market value during the appraisal process and the production of the report. House inspectors will compose a report that will determine the condition of the home and its major components and possible damage.