Appraisal myths & facts
By law, an appraiser is required to be state-licensed to perform appraisals for federally-related sales. The law allows you to acquire a copy of your completed report from your lender after it has been produced. Contact us if you have any concerns about the appraisal procedure.
Myth: The value that is ascertained by the appraiser should be exactly the same as the market value.
Fact: While most states support the concept that assessed value equates estimated market value, this usually is not the case. 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 prolonged time.
Myth: The value of a home will vary depending upon if the appraisal is ordered for the buyer or the seller.
Fact: There is no personal interest on the part of the appraiser in the outcome of the report, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is written.
Myth: Market value will approximate replacement cost.
Fact: Without any influence from any outside parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a specific home. The dollar amount demanded to reconstruct a house is what constitutes the replacement cost.
Myth: There are specific ways that appraisers use to find the opinion of value of a home, such as the price per square foot.
Fact: There are many numerous processes that an appraiser will use to make an in-depth analysis of every factor pertaining to the property, such as the size, location, condition, how close it is to specific facilities and the opinion of value of recently sold comparable homes.
Myth: As properties appreciate by a certain percentage - in a robust economy - the properties within the same neighborhood are figured to appreciate by the same amount.
Fact: Cost increase of a specific house must be determined on a case-by-case basis, factoring in data on comparable houses and other relevant elements. It makes no difference whether the economy is powerful or on the decline.
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Myth: Just looking at what the property looks like on its exterior gives a good idea of its value.
Fact: There are a multitude of different variables that show property value; these factors include location, condition, improvements, amenities, and market trends. An outside-only inspection definitely can't provide all of the data needed.
Myth: Because consumers fund the appraisal when applying for loans to buy or refinance real estate, they own their appraisal.
Fact: The appraisal report is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the appraisal report. Due the Equal Credit Opportunity Act, any consumer asking for a copy of the document must be given it by their lending agency.
Myth: It doesn't concern consumers what's in the appraisal report so long as it meets the requirements of their lending company.
Fact: It is almost imperative for consumers to go through a copy of their appraisal report so that they can verify the accuracy of the document, in case they need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes an invaluable record for future reference, filled with helpful 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 area.
Myth: There is no reason to hire an appraiser unless you are trying to get an estimate of the cost of a house during a sales transaction involving a lender.
Fact: Appraisers can have many varied qualifications and designations which allow them to provide 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: An appraisal is the same as a home inspection report.
Fact: A home inspection has a completely different purpose than an appraisal. The appraiser concludes on an opinion of value in the appraisal process and resulting report. A home inspector assesses the condition of the house and its main components and reports their findings.