Common myths about appraising
It is required by the government that an appraiser must be state-licensed to produce appraisals for federally-supported real estate purchases in California. You also have the right to acquire a copy of the finished report from your lending agency. Contact The Appraisal Firm if you have any questions about the appraisal process.
Myth: Market value needs to be equivocal to the assessed value of the property.
Fact: It is probable that California, like most states, validates the common myth that the assessed value equates to the market value; however, this is not often the case. Interior reconstruction that the assessor is not aware of and a dearth of reassessment on nearby houses are exact examples of why the price can vary.
Myth: The buyer or the seller may have some pull in the value of the home depending upon for whom the appraiser is working.
Fact: The cost of the home does not affect the pay of the appraiser; as such, the appraiser has no vested interest in the opinion of value of the home. What this means is he will render services with impartiality and objectivity regardless for whom the appraisal is provided.
Myth: The replacement value of the property is always is on par with the market value.
Fact: Market value is found by what a willing buyer would be interested in paying a willing seller for a specific property, with neither being under undue influence to buy or sell. Replacement value is the dollar amount needed to rebuild a home in-kind.
Myth: There are certain ways that appraisers use to find the opinion of value of a property, like the price per square foot.
Fact: Appraisers make an exhaustive analysis of all factors pertaining to the worth of a house, including its location, condition, size, proximity to facilities and recent costs of comparable properties.
Myth: As homes appreciate by a specific percentage - in a robust economic state - the homes around the appreciating properties are figured to appreciate by the same amount.
Fact: Price increase of a certain home has to be determined on a case-by-case basis, factoring in information on comparable properties and other relevant elements. It makes no difference if the economy is robust or terrible.
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Myth: Just examining what the property looks like on the outside gives an idea of its worth.
Fact: There are a number of different factors that determine property value; these factors include location, condition, improvements, amenities, and market trends. Obviously, none of these variables can be found simply by viewing the home from the exterior.
Myth: Since you're the one paying for the appraisal when applying for the loan to buy or refinance real estate, you own the ordered appraisal report.
Fact: Legally, the document is owned by the lender unless the lender relinquishes their interest in the appraisal. However, consumers must be provided with a copy of the document upon written request, through the Equal Credit Opportunity Act.
Myth: There's no point for consumers to even care about what the report contains so long as their lending agency is satisfied.
Fact: A consumer should definitely read through their appraisal; there could be some questions or some concerns about the accuracy of the analysis that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes a valuable record for future reference, containing 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 home values in property sales involving mortgage-lending deals.
Fact: Hiring an appraiser can fulfill a variety of needs depending on the designations and certifications of the appraiser involved; appraisers can perform a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: A home inspection serves the same purpose as an appraisal.
Fact: An appraisal does not fulfill the same purpose as an inspection. The appraiser decides upon an opinion of value in the appraisal process and resulting document. The point of a home inspector is to find the condition of the home and its major components, then write a report on these inspection.