Appraisal myths debunked
By law, an appraiser must be state-licensed to offer appraisals for federally-backed sales. Also by law, you are allowed to request a copy of the finished appraisal report from your lender. Contact The Appraisal Firm if you have any questions about the appraisal process.
Myth: Market value should be similar to 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. Sometimes when interior remodeling has been done and the assessor is has not investigated the improvement or other homes in the area have not been reassessed for a good length of time, it may vary wildly.
Myth: Depending on if the appraisal is written for the buyer or the seller, the opinion of value of the house will vary.
Fact: There is no vested interest on the part of the appraiser in the outcome of the appraisal report, therefore he will complete his work with impartiality and independence, despite for whom the appraisal is written.
Myth: Any time market value is established, it should be similar to the replacement cost of the house.
Fact: Market value is acquired by what a willing buyer would likely pay a willing seller for a certain property, with neither being under pressure to buy or sell. Replacement cost is the dollar amount needed to reconstruct a home in-kind.
Myth: There are certain ways that appraisers use to show the opinion of value of a property, like the price per square foot.
Fact: There are many numerous processes 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 specific facilities and the worth of recently sold comparable homes.
Myth: As properties increase their worth by a specific percentage - in a robust economic state - the houses in proximity are figured to increase by the same amount.
Fact: All appreciation of value is on a case-by-case basis, found by information on relevant considerations and the data of comparable properties. This is true in good economic times as well as bad.
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Myth: The house's exterior is determinate of the actual value of the house; it is unnecessary to do an interior inspection.
Fact: To find an accurate value beyond all doubt, an appraiser must inspect the property on a variety of factors based on location, condition, improvements, amenities, and market trends. Obviously, none of these factors can be found just by inspecting the house from the exterior.
Myth: Because consumers fund appraisal reports when applying for loans to buy or refinance their property, they legally own their appraisal report.
Fact: Unless a lending agency releases its vestment in the appraisal report, it is legally owned by the lending agency that purchased the appraisal. However, consumers must be given a copy of the document upon written request, through the Equal Credit Opportunity Act.
Myth: Consumers need not care about what is in their appraisal document so long as it exceeds the requirements of their lending institution.
Fact: A consumer should definitely inspect their appraisal report; there might be some questions or some concerns about the accuracy of the analysis that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes an invaluable record for future reference, comprised of useful and often-revealing data - including 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 estimate building values in property sales involving mortgage-lending transactions.
Fact: Appraisers can have many different qualifications and designations which allow them to provide a multitude of different services including - but definitely not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: There's no reason to get an appraisal if you get a home inspection.
Fact: An appraisal does not fulfill the same purpose as an inspection report. The task of the appraiser is to come to an opinion of value in the appraisal process and through creating the report. House inspectors will write a report that will determine the condition of the property and its major components and possible damage.