Appraisal myths & facts
Legally, a real estate appraiser must be state certified to create substantiated real estate appraisals for federally-supported purchase. You also have the right to request a copy of the finished appraisal from your lender. Contact us if you have any questions about the appraisal procedure.
Myth: Market value must be the same as the assessed value of the property.
Fact: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. Sometimes when interior remodeling has been done and the assessor is unaware of the improvement or other houses in the neighborhood have not been reassessed for quite some time, it may vary wildly.
Myth: The opinion of value of a house will be different depending upon if the appraisal is provided for the buyer or the seller.
Fact: The appraiser has no vested interest in the result of the appraisal report and should complete services with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Any time market value is found, it should be similar to the replacement cost of the home.
Fact: Without any suggestion from any external parties to buy or sell, market value is what a willing buyer would pay an interested seller for a particular house. If the property were rebuilt, the dollar amount required to do so would set the replacement cost.
Myth: There are certain methods that appraisers use to find the opinion of value of a house, like the price per square foot.
Fact: Appraisers complete a full analysis of all factors pertaining to the worth of a property, including its location, condition, size, proximity to facilities and recent costs of comparable properties.
Myth: In a strong economy - when the sales prices of houses in a given neighborhood are found to be rising by a particular percentage - the prices of individual houses in the area can be expected to appreciate by that same percentage.
Fact: Cost increase of a certain home must be determined on a case-by-case basis, factoring in information on comparable properties and other relevant specifications within the home itself. It makes no difference whether the economy is powerful or terrible.
Have other questions about appraisers, appraising or real estate in Orange County or Huntington Beach, CA?Contact us
Myth: The property's exterior is determinate of the actual worth of the property; it is unnecessary to do an interior inspection.
Fact: There are a number of different variables that show property value; these factors include location, condition, improvements, amenities, and market trends. There's no real way to get all of this information from simply inspecting the home from the exterior.
Myth: Since you're the one providing the money for the appraisal when applying for your loan to purchase or refinance your house, you own the ordered appraisal report.
Fact: The appraisal is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the document. However, consumers have to be provided with a copy of the appraisal report upon written request, because of the Equal Credit Opportunity Act.
Myth: There's no reason for home buyers to even worry about what the appraisal contains so long as their lending agency is satisfied.
Fact: It is almost imperative for home buyers to peruse a copy of their appraisal so that they can verify the accuracy of the report, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes a near perfect record for future reference, filled with useful and often-revealing data - 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 proximity.
Myth: The only reason someone would hire an appraiser is if a house needs its value assessed in a lender sales transaction.
Fact: Based upon their qualifications and designations, appraisers can and do provide a variety 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 report does not serve the same purpose as an inspection report. The function of an appraisal is to conclude upon an opinion of fair market value during the appraisal process and the completion of the appraisal report. House inspectors will produce a report that will explain the condition of the house and its major components and possible damage.