Appraisal myths & facts
It is required by law that a real estate appraiser is required to be state-licensed to produce appraisal reports for federally-related property purchases in . Also by law, you are entitled to demand a copy of the finished appraisal report from your lender. Contact if you have any questions about the appraisal process.
Myth: Assessed value should always equate to market value.
Fact: While most states back the idea that assessed value is the same as estimated market value, this commonly is not the case. At times when interior remodeling has been done and the assessor is not aware of the improvement or other homes in the area have not been reassessed for quite some time, it may vary wildly.
Myth: Depending on whether the appraisal is drawn up for the buyer or the seller, the cost of the home will vary.
Fact: There is no real interest on the part of the appraiser in the outcome of the analysis, therefore he will complete his work with impartiality and independence, no matter for whom the appraisal is ordered.
Myth: The replacement cost of the property should be is on par with the market value.
Fact: Market value is arrived at through what a willing buyer would be interested in paying a willing seller for a particular property, with neither being under pressure to buy or sell. The dollar amount demanded to reconstruct a home is what constitutes the replacement cost.
Myth: Specific methods, such as the price per square foot of the property, are what appraisers use to ascertain the worth of a home.
Fact: Appraisers complete an exhaustive analysis of all factors pertaining to the price of a property, including its location, condition, size, proximity to facilities and recent opinion of value of comparable houses.
Myth: When the economy is robust and the worth of properties are found to be appreciating by a certain percentage, the other properties in the neighborhood can be expected to rise based on that same percentage.
Fact: All appreciation of price is on a case-by-case basis, found by information on relevant conditions and the data of comparable homes. It doesn't matter if the economy is doing well or declining.
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Myth: The property's exterior is determinate of the actual price of the home; there is no need to do an interior appraisal.
Fact: House value is determined by a multitude of factors, including - but not limited to - area, condition, improvements, amenities, and market trends. Obviously, none of these variables can be found just by examining the house from the exterior.
Myth: Because the consumer is the one who provides the capital to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal report belongs to them.
Fact: Legally, the appraisal is owned by the lending company unless the lender relinquishes their interest in the appraisal. Under the Equal Credit Opportunity Act, any home buyer demanding a copy of the appraisal report must be given it by their lender.
Myth: It doesn't matter to consumers what's in the appraisal so long as it meets the necessities of their lending company.
Fact: Only if home buyers look over a copy of their report can they double-check its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of data contained in an appraisal that should be useful to the home buyer 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 proximity.
Myth: Appraisals are ordered only to assess building values in house sales involving mortgage-lending deals.
Fact: Based upon their qualifications and designations, appraisers can and do perform a series of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal is the same as a home inspection report.
Fact: Appraisal reports are nothing like a home inspection report. The reason behind an appraisal is to arrive at an opinion of fair market value during the appraisal process and the completion of the appraisal. House inspectors will produce a report that will show the condition of the house and its major components and possible damage.