Appraisal myths debunked
Legally, a real estate appraiser has to be state certified to create legitimate appraisal reports for federally-backed purchase. You are also entitled by law to receive a copy of the finished report from your lending agency. Contact our professional staff if you have any concerns about the appraisal procedure.
Myth: Assessed value should always be equal to market value.
Fact: This usually isn't true; 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 happened and the assessor has not seen the improvements, or when houses in the vicinity have not been reassessed for an prolonged period of time.
Myth: The buyer or the seller can have impact in the cost of the property depending upon for whom the appraiser is working.
Fact: There is no vested interest on the part of the appraiser in the result of the appraisal, therefore he will complete his work with impartiality and independence, no matter for whom the appraisal is ordered.
Myth: Market value should be the same as replacement cost.
Fact: Without any influence from any different parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific house. The replacement cost is the dollar amount needed to rebuild a property in-kind.
Myth: Certain formulae, such as the price per square foot of the property, are the methods appraisers use to ascertain the price of a property.
Fact: Appraisers complete a detailed analysis of all factors in consideration to the price of a house, including its location, condition, size, proximity to facilities and recent worth of comparable homes.
Myth: In a robust economy - when the sales prices of homes in a given region are found to be increasing by a particular percentage - the prices of individual homes in the vicinity can be expected to appreciate by that same percentage.
Fact: Price increase of a specific home must be determined on an individualized basis, factoring in data on comparable properties and other relevant considerations. This is true in strong economic times as well as bad.
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Myth: Just looking at what the home looks like on the outside gives an idea of its worth.
Fact: To find an accurate worth beyond all doubt, an appraiser must examine the property 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 data from simply looking at the property from the outside.
Myth: Because consumers pay for appraisal reports when applying for loans to buy or refinance real estate, they legally own their appraisal.
Fact: The report is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the report. Consumers must be given a version of the report upon written request because of the Equal Credit Opportunity Act.
Myth: There's no reason for home buyers to even concern themselves with what the appraisal report contains so long as their lending agency is satisfied.
Fact: A consumer should definitely read through their appraisal; there will probably be some questions or some worries with the accuracy of the appraisal that must be addressed. 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 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 area.
Myth: The only reason someone would order an appraisal is if a home needs its price estimated in a lender-based sales transaction.
Fact: Appraisers can have many varied qualifications and designations which allow them to provide a variety of different services including - but definitely not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: An appraisal report is the same as a home inspection.
Fact: An appraisal report does not fulfill the same purpose as an inspection. The job of the appraiser is to come to an opinion of value in the appraisal process and through writing the report. The task of a home inspector is to determine the condition of the home and its main components, then create a report on these inspection.