Appraisal myths debunked
By law, an appraiser needs to be state-licensed to perform appraisals for federally-backed transactions. You have the ability to demand a copy of the finished appraisal from your lender. Contact our professional staff if you have any concerns about the appraisal procedure.
Myth: Market value has to 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. There are times when interior remodeling has occurred and the assessor is unaware of the improvement or other houses in the area have not been reassessed for years or more, it may vary wildly.
Myth: The buyer or the seller may have impact in the value of the home 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 conduct his work with impartiality and independence, no matter for whom the appraisal is ordered.
Myth: The replacement value of the house is always is on par with the market value.
Fact: Market value is arrived at through what a willing buyer would likely pay a willing seller for a certain house, with neither being under undue influence to buy or sell. The replacement cost is the dollar amount needed to rebuild a property in-kind.
Myth: There are certain methods that appraisers use to determine the value of a home, like the price per square foot.
Fact: There are many numerous formulae that an appraiser will use to make an in-depth investigation of every factor in consideration of the home, such as the size, location, condition, how close it is to undesirable facilities and the value of recently sold comparable houses.
Myth: In a powerful economy - when the values of properties in a given neighborhood are found to be appreciating by a certain percentage - the values of individual properties in the area can be expected to increase by that same percentage.
Fact: Price appreciation of a certain property has to be determined on an individualized basis, factoring in information on comparable homes and other relevant elements. It doesn't matter if the economy is on the rise or declining.
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Myth: The house's exterior is determinate of the actual price of the property; there is no need to do an interior appraisal.
Fact: To determine an accurate worth beyond all doubt, an appraiser must examine the house on a variety of factors based on location, condition, improvements, amenities, and current market trends. Obviously, none of these factors can be found simply by viewing the property from the exterior.
Myth: Because the consumer is the person who provides the funding to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal report belongs to them.
Fact: The document is, in fact, legally owned by the lending company - unless the lender "relinquishes its interest" in the appraisal report. Home buyers have to be provided with a version of the document upon written request because of the Equal Credit Opportunity Act.
Myth: It doesn't matter to consumers what's in the appraisal so long as it satisfies the requirements of their lender.
Fact: A home buyer should definitely read through their appraisal report; there may be some questions or some concerns about the accuracy of the appraisal that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can serve as a record for the future, as it contains a great deal 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 vicinity.
Myth: The only reason someone would order an appraisal is if a house needs its cost estimated in a lender sales transaction.
Fact: Appraisers can have many different qualifications and designations which allow them to provide a multitude of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: A house inspection serves the same purpose as an appraisal.
Fact: A home inspection report has a completely different purpose than an appraisal report. The point of an appraisal is to conclude upon an opinion of fair market value during the appraisal process and the production of the report. A home inspector assesses the condition of the home and its main components and reports their findings.