Appraisal myths & facts
By law, an appraiser is required to be state-licensed to produce appraisals for federally-backed purchases. The law allows you to receive a copy of your completed appraisal report from your lender after it has been produced. Contact Appraisal-One if you have any questions about the appraisal process.
Myth: The value that is assessed by the appraiser must be the same as the market value.
Fact: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always. Examples include when interior remodeling has occurred and the assessor does not know about the improvements, or when properties in the vicinity have not been reassessed for an extended period.
Myth: The opinion of value of a property will differ depending upon if the appraisal is provided for the buyer or the seller.
Fact: The opinion of value of the home does not affect the salary of the appraiser; as a result, the appraiser has no preconceived interest in the worth of the property. This means that he will provide services with impartiality and independence regardless for whom the appraisal is produced.
Myth: Market value will approximate replacement cost.
Fact: Market value is found by what a willing buyer would be interested in paying a willing seller for a certain house, with neither being under undue influence to buy or sell. Replacement cost is the dollar amount needed to rebuild a house in-kind.
Myth: Certain formulae, like the price per square foot of the property, are the ways appraisers use to determine the price of a house.
Fact: An appraisal is a collection of information concluded from the property's size, location, proximity to some facilities, the condition of the house and the cost of recent comparable sales. You can depend on Appraisal-One's staff to be professional in assessing this information.
Myth: As homes appreciate by a certain percentage - in a robust economic state - the homes around the appreciating properties are expected to increase by the same amount.
Fact: Any value at which an appraiser concludes in regards to a particular home is always individualized, based on certain factors found from the information of comparable houses and other specifications within the property itself. It doesn't matter if the economy is doing well or declining.
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Myth: You can generally find what a property is worth simply by looking at the outside.
Fact: To find an accurate value beyond all doubt, an appraiser must examine the house on a variety of factors based on location, condition, improvements, amenities, and current market trends. An outside-only inspection definitely can't provide all of the data needed.
Myth: Since you're the one paying for the appraisal report when applying for your loan to purchase or refinance your home, you own the provided appraisal.
Fact: Unless a lending agency releases its vestment in the appraisal report, it is legally owned by the lending agency that purchased the appraisal. However, home buyers must be supplied with a copy of the document upon written request, under the Equal Credit Opportunity Act.
Myth: Home buyers need not care about what is in their appraisal document so long as it exceeds the requirements of their lending institution.
Fact: It is almost imperative for consumers to check over a copy of their report so that they can double-check the accuracy of the document, in case it's required to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can serve as a record for the future, containing an incredible amount of data - including, but certainly 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 proximity.
Myth: There is no reason to order an appraisal unless you are trying to get an estimate of the value of a property during a sales transaction involving a lending agency.
Fact: Based upon their qualifications and designations, appraisers can and may provide a multitude of 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 does not serve the same purpose as an inspection report. The appraiser decides upon an opinion of value in the appraisal process and resulting appraisal. The point of a home inspector is to assess the condition of the property and its major components, then provide a report on these findings.