Appraisal myths debunked
By law, an appraiser is required to be state-licensed to perform appraisals for federally-supported sales. You also have the right to acquire a copy of the finished report from your lender. Contact The Appraisal Firm if you have any concerns about the appraisal process.
Myth: Assessed value generally will be the same as to market value.
Fact: It might be that California, like most states, supports the idea that the assessed value is no different from 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 properties are perfect examples of why the price can vary.
Myth: Depending on if the appraisal is drawn up for the buyer or the seller, the appraised value of the property will vary.
Fact: There is no vested interest on the part of the appraiser in the result of the appraisal, therefore he will complete his work with impartiality and independence, despite for whom the appraisal is ordered.
Myth: Any time market value is established, it should be the same as the replacement cost of the home.
Fact: Without any influence from any different parties to buy or sell, market value is what a willing buyer would pay a willing seller for a particular house. If the home were reconstructed, the dollar amount required to do so would form the replacement cost.
Myth: Appraisers use a formula, such as a certain price per square foot, to conclude the value of a home.
Fact: There are many numerous ways that an appraiser will use to make a detailed analysis of every factor in consideration of the home, such as the size, location, condition, how close it is to specific facilities and the worth of recently sold comparable houses.
Myth: When the economy is doing well and the sales prices of properties are reported to be appreciating by a certain percentage, the other properties in the area can be expected to appreciate based on that same percentage.
Fact: Any price at which an appraiser arrives in regards to a specific home is always personalized, based on certain factors derived from the information of comparable houses and other considerations within the home itself. It makes no difference if the economy is powerful or on the decline.
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Myth: Just examining what the house looks like on its exterior gives a good idea of its value.
Fact: There are a multitude of different variables that conclude property value; these factors include location, condition, improvements, amenities, and market trends. An exterior inspection definitely can't provide all of the information necessary.
Myth: Because the consumer is the party who provides the funding to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal is theirs.
Fact: Unless a lender releases its interest in the report, it is legally owned by the lending agency that purchased the appraisal. Due the Equal Credit Opportunity Act, any consumer demanding a copy of the appraisal report must be provided with it by their lender.
Myth: Home buyers need not worry about what is in their appraisal report so long as it satisfies the needs of their lending company.
Fact: Only if consumers read a copy of their appraisal 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 great deal of information stored in an appraisal that can be useful to the consumer 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: Appraisers are hired only to estimate real estate property values in property sales involving mortgage-lending deals.
Fact: Ordering an appraisal can fulfill a variety of wants 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 house inspection serves the same purpose as an appraisal.
Fact: Appraisal reports are nothing like a home inspection. An appraiser finds an opinion of value in the appraisal process and resulting document. A home inspector determines the condition of the property and its major components and reports their findings.