Myth: Assessed value should always be similar to market value.
Reality: While most states uphold the concept that assessed value is the same as estimated market value, this usually is not the case.
Interior remodeling that the assessor is not aware of and a dearth of reassessment on nearby homes are perfect examples of why there might be a differential in price.
Myth: The appraised value of a property will change depending upon whether the appraisal is conducted for the buyer or the seller.
Reality: The appraiser has no personal interest in the outcome of the appraisal and should render his job with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Any time market value is calculated, it should be the same as the replacement cost of the home.
Reality: The way market value is arrived at is based on what a buyer would likely pay a willing seller for a house without being under pressure from any external party to purchase or sell.
If the property were reconstructed, the dollar amount required to do so would set the replacement cost.
Myth: Certain formulae, such as the price per square foot, are the ways appraisers use to ascertain the value of a house.
Reality: There are many different ways that an appraiser will use to make a comprehensive investigation of every factor in consideration of the house, such as the size, location, condition, how close it is to certain facilities and the sales prices of recently sold comparable properties.
Myth: In a powerful economy - when the prices of houses in a given neighborhood are reported to be rising by a particular percentage - the prices of individual houses in the proximity can be expected to rise by that same percentage.
Reality: Any value an appraiser reports in regards to a particular house is always personalized, based on certain factors derived from the data of comparable properties and other considerations within the home itself.
This is true in robust economic times as well as bad.
Myth: Just examining what the house looks like on its exterior gives a good idea of its value.
Reality: There are a number of different factors that determine property value; these factors include location, condition, improvements, amenities, and market trends.
There's no possible way to get all of this data from just inspecting the house from the outside.
Myth: Since you're the one funding for the appraisal report when applying for your loan to purchase or refinance your home, you own the provided appraisal.
Reality: The appraisal is, in fact, legally owned by the lending company - unless the lender "relinquishes its interest" in the appraisal report.
However, consumers have to be provided with a copy of the document upon written request, under the Equal Credit Opportunity Act.
Myth: It doesn't concern consumers what's in the report so long as it meets the requirements of their lending agency.
Reality: A consumer should definitely read through their appraisal; there will probably be some questions or some worries with the accuracy of the inspection that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make.
There is an incredible amount of information contained in an appraisal report that will probably be useful to the consumer in the future, such as 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 region.
Myth: The only reason someone would order an appraisal is if a house needs its value estimated in a lender sales transaction.
Reality: Appraisers can have many different qualifications and designations which allow them to perform a multitude of different services including - but not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: There's no need to get an appraisal if you order a home inspection.
Reality: A home inspection report serves a completely different purpose than an appraisal.
An appraiser forms an opinion of value in the appraisal process and resulting appraisal report.
House inspectors will create a report that will show the condition of the house and its major components and possible damage.