Appraisal myths & facts
By law, an appraiser must be state-licensed to offer appraisals for federally-backed purchases. The law gives you the right to receive a copy of your completed appraisal report from your lending agency after it has been provided. Contact our professional staff if you have any questions about the appraisal process.
Myth: Assessed value should be equal to market value.
Fact: While most states back the concept that assessed value is equal to estimated market value, this commonly is not the case. Interior reconstruction that the assessor is unaware of and a dearth of reassessment on nearby properties are prime examples of why this occurs.
Myth: Depending on whether the appraisal is produced for the buyer or the seller, the value of the home will vary.
Fact: The value of the house does not affect the payment of the appraiser; due to this, the appraiser has no preconceived interest in the value of the property. Obviously, he will provide services with impartiality and independence regardless for whom the appraisal is provided.
Myth: Any time market value is found, it should equal the replacement cost of the home.
Fact: Without any pressure from any external parties to buy or sell, market value is what a willing buyer would pay a willing seller for a specific home. The dollar amount demanded to rebuild a property is what shows the replacement cost.
Myth: Specific methods, such as the price per square foot, are what appraisers use to arrive at the value of a home.
Fact: An appraisal is an assertion of information based on the house's size, location, proximity to specific facilities, the condition of the home and the worth of recent comparable sales. You can count on Appraisal-One's appraisers to be forthright in assessing this information.
Myth: When the economy is strong and the worth of properties are reported to be increasing by a certain percentage, the other homes in the vicinity can be expected to rise based on that same percentage.
Fact: Any price at which an appraiser arrives in regards to a certain property is always personalized, based on certain factors derived from the information of comparable houses and other considerations within the house itself. It doesn't matter if the economy is doing well or declining.
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Myth: You can generally see what a house is worth simply by looking at the exterior.
Fact: Property worth is concluded by a multitude of factors, including location, condition, improvements, amenities, and market trends. As you can see, none of these factors can be derived simply by looking at the property from the outside.
Myth: Considering that the consumer is the one who puts up the capital to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal report belongs to them.
Fact: The report is, in fact, legally owned by the lender - unless the lender "releases its interest" in the appraisal. Home buyers must be supplied with a copy of the report through request as per the Equal Credit Opportunity Act.
Myth: There's no point for home buyers to even concern themselves with what the appraisal contains so long as their lending institution is fine with the contents therein.
Fact: Only if consumers look at a copy of their appraisal 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. An appraisal report can double as a record for the future, containing an exorbitant amount of information - including, but not limited to 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 hire an appraiser is if a home needs its price estimated in a lender sales transaction.
Fact: Depending upon their qualifications and designations, appraisers can and will provide a variety of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: You don't have to get an appraisal if you get a home inspection.
Fact: Appraisal reports are definitely not the same as a home inspection. The job of the appraiser is to arrive at an opinion of value in the appraisal process and through producing the report. A home inspector assesses the condition of the property and its major components and reports these findings.