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Common myths about appraising

By law, an appraiser is enforced to be state-licensed to produce appraisals for federally-supported transactions. You have the ability to receive a copy of the completed appraisal from your lender. Contact us if you have any questions about the appraisal process.

Myth: The value that is assessed by the appraiser should be the same as the market value.

Fact: While most states uphold the idea that assessed value approximates estimated market value, this usually is not the case. Interior reconstruction that the assessor has not investigated and a lack of reassessment on nearby houses are exact examples of why the price can vary.

Myth: The opinion of value of a house will vary depending upon whether the appraisal is ordered for the buyer or the seller.

Fact: The appraiser has no personal interest in the outcome of the appraisal report and should conduct his job with independence, objectivity and impartiality - no matter for whom the appraisal is written.

Myth: The replacement value of the property is always is on par with the market value.

Fact: Without any pressure from any external parties to buy or sell, market value is what a willing buyer would pay an interested seller for a particular house. Replacement value is the dollar amount needed to rebuild a house in-kind.

Myth: Appraisers use a calculation, such as a certain price per square foot, to come to the worth of a home.

Fact: There are many different formulae that an appraiser will use to make a detailed investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to specific facilities and the sales price of recently sold comparable houses.

Myth: In a robust economy - when the values of homes in a given neighborhood are reported to be appreciating by a certain percentage - the values of individual houses in the proximity can be expected to appreciate by that same percentage.

Fact: Any price at which an appraiser concludes in regards to a specific house is always personalized, based on certain factors pulled from the data of comparable homes and other considerations within the home itself. It doesn't matter if the economy is on the rise or declining.

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Myth: Just examining what the property looks like on the outside gives a good idea of its cost.

Fact: There are a number of different factors that show property value; these factors include area, condition, improvements, amenities, and market trends. There's no real way to get all of this information from just looking at the house from the exterior.

Myth: Because consumers pay for appraisal reports when applying for loans to buy or refinance real estate, they own their appraisal.

Fact: Legally, the appraisal report is owned by the lender unless the lender releases their interest in the appraisal. Due the Equal Credit Opportunity Act, any consumer requesting a copy of the appraisal report must be provided with one by their lender.

Myth: There's no point for home buyers to even care about what the report contains so long as their lending company is fine with the contents therein.

Fact: It is a very good idea for consumers to read a copy of their report so that they can verify the accuracy of the report, in case it's required to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of data stored in an report that can 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 proximity.

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 company.

Fact: Ordering an appraisal can fulfill a variety of wants depending on the designations and certifications of the appraiser involved; appraisers can perform a variety 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.

Fact: An appraisal report does not serve the same purpose as an inspection. The appraiser concludes on an opinion of value in the appraisal process and resulting document. House inspectors will produce a report that will determine the condition of the property and its major components and possible damage.