Appraisal myths debunked
By law, an appraiser needs to be state-licensed to produce appraisals for federally-related transactions. You have the ability to demand a copy of the finished appraisal from your lending agency. Contact if you have any questions about the appraisal process.
Myth: Market value will always be the same as the assessed value of the property.
Fact: While most states back the concept that assessed value is equal to estimated market value, this commonly is not the case. Interior reconstruction that the assessor has not investigated and a dearth of reassessment on nearby homes are prime examples of why this occurs.
Myth: The opinion of value of a property will be different depending upon if the appraisal is produced for the buyer or the seller.
Fact: There is no vested 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 created.
Myth: The replacement value of the property is always is on par with the market value.
Fact: Market value is derived from what a willing buyer would be interested in paying a willing seller for a certain house, with neither being under duress to buy or sell. Replacement cost is the dollar amount needed to reconstruct a property in-kind.
Myth: Appraisers use a calculation, like a certain price per square foot, to come to the value of a property.
Fact: Appraisers complete a comprehensive analysis of all factors pertaining to the price of a home, including its location, condition, size, proximity to facilities and recent sale prices of comparable homes.
Myth: When the economy is robust and the worth of houses are reported to be rising by a certain percentage, the other houses in the area can be expected to increase based on that same percentage.
Fact: All appreciation of value is on a case-by-case basis, found by information on relevant conditions and the data of comparable homes. This is true in strong economic times as well as bad.
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Myth: Just seeing what the home looks like on the outside gives a good idea of its value.
Fact: To conclude an accurate price beyond all doubt, an appraiser must examine the property on a variety of factors based on location, condition, improvements, amenities, and market trends. Obviously, none of these factors can be derived just by inspecting the property from the exterior.
Myth: Since the consumer is the one who puts up the money to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal belongs to them.
Fact: Unless a lender releases its vestment in the document, it is legally owned by the lending company that ordered the appraisal. However, home buyers have to be provided with a copy of the appraisal upon written request, due to the Equal Credit Opportunity Act.
Myth: Consumers need not care about what is in their appraisal report so long as it exceeds the needs of their lending agency.
Fact: Only if consumers examine a copy of their report can they ensure its accuracy and possibly need to question the result. 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, as it contains an incredible amount of information - 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 vicinity.
Myth: Appraisers are hired only to estimate home values in house sales involving mortgage-lending transactions.
Fact: Based upon their qualifications and designations, appraisers can and do perform a lot of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A home inspection serves the same purpose as an appraisal.
Fact: An appraisal does not serve the same purpose as an inspection. The purpose of the appraiser is to come to an opinion of value in the appraisal process and through writing the report. The purpose of a home inspector is to approximate the condition of the house and its main components, then write a report on these inspection.