Appraisal myths & facts
It is mandated by legal agencies that an appraiser needs to be state-licensed to write appraisals for federally-related home transactions in California. You have the ability to request a copy of the completed appraisal from your lending agency. Contact us if you have any questions about the appraisal process.
Myth: The value that is assessed by the appraiser should be exactly the same as the market value.
Fact: While most states back the idea that assessed value approximates estimated market value, this often is not the case. Usually when interior remodeling has occurred and the assessor is not aware of the improvement or properties in the area have not been reassessed for a good length of time, it may vary wildly.
Myth: Depending on whether the appraisal is drawn up for the buyer or the seller, the opinion of value of the house will vary.
Fact: The appraiser has no personal interest in the outcome of the report and should conduct his task with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Market value should equal replacement cost.
Fact: The way market value is found is based on what a home buyer would likely pay a willing seller for a house without being under duress from any outside group to purchase or sell. If the property were reconstructed, the dollar amount necessary to do so would be the replacement cost.
Myth: There are specific methods that real estate appraisers use to find the opinion of value of a house, such as the price per square foot.
Fact: There are many differing methods that an appraiser will use to make an in-depth investigation of every factor pertaining to the house, such as the size, location, condition, how close it is to undesirable facilities and the value of recently sold comparable houses.
Myth: As properties appreciate by a certain percentage - in a robust economy - the properties within the same neighborhood are expected to appreciate by the same amount.
Fact: Any cost at which an appraiser concludes in regards to a particular house is always individualized, based on certain factors concluded from the information of comparable properties and other considerations within the home itself. It makes no difference if the economy is excellent or bad.
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Myth: Just examining what the house looks like on the outside gives a good idea of its value.
Fact: There are a multitude of different factors that determine the value of a home; these factors include location, condition, improvements, amenities, and market trends. Obviously, none of these factors can be derived simply by viewing the home from the outside.
Myth: Since you're the one coughing up the cash for the appraisal when applying for your loan to purchase or refinance your home, you own the produced appraisal report.
Fact: Legally, the document is owned by the lender unless the lender relinquishes their interest in the appraisal. Under the Equal Credit Opportunity Act, any home buyer requesting a copy of the appraisal report must be given it by their lending company.
Myth: It doesn't matter to consumers what's in the appraisal so long as it meets the necessities of their lending agency.
Fact: Only if consumers look through a copy of their appraisal 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 report can serve as a record for the future, containing a great deal of data - including, but certainly 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: The only reason someone would order an appraisal is if a house needs its price assessed in a lender sales transaction.
Fact: Appraisers can have many different qualifications and designations which allow them to perform a variety 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: A home inspection serves the same purpose as an appraisal.
Fact: A home inspection serves a completely different purpose than an appraisal. An appraiser forms an opinion of value in the appraisal process and resulting report. The job of a home inspector is to determine the condition of the home and its major components, then provide a report on their conclusions.