Common myths about appraising
By law, an appraiser is required to be state-licensed to offer appraisals for federally-supported transactions. The law entitles you to receive a copy of your finished appraisal report from your lender after it has been produced. Contact us if you have any questions about the appraisal procedure.
Myth: The value that is ascertained by the appraiser will be exactly the same as the market value.
Fact: This is not often the case; most states do support the suggestion that the assessed value is the same as market value, but not always. Examples include when interior remodeling has happened and the assessor is unaware of the improvements, or when properties in the vicinity have not been reassessed for an prolonged time.
Myth: The value of a property will vary depending upon if the appraisal is produced for the buyer or the seller.
Fact: The value of the home does not affect the payment of the appraiser; as such, the appraiser has no vested interest in the value of the home. What this means is he will render task with impartiality and objectivity regardless for whom the appraisal is provided.
Myth: Market value will approximate replacement cost.
Fact: Market value is based on what a willing buyer would be interested in paying a willing seller for a particular house, with neither being under undue influence to buy or sell. If the home were rebuilt, the dollar amount necessary to do so would be the replacement cost.
Myth: There are specific methods that real estate appraisers use to determine the value of a property, such as the price per square foot.
Fact: Appraisers make a comprehensive analysis of all factors in consideration to the value of a house, including its location, condition, size, proximity to facilities and recent opinion of value of comparable homes.
Myth: When the economy is on the rise and the value of homes are found to be appreciating by a certain percentage, the other houses in the area can be expected to increase based on that same percentage.
Fact: Worth appreciation of a certain property has to be determined on an individualized basis, factoring in information on comparable homes and other relevant considerations. It makes no difference whether the economy is strong or terrible.
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Myth: Just seeing what the home looks like on the outside gives a good idea of its cost.
Fact: House worth is determined by a multitude of factors, including location, condition, improvements, amenities, and market trends. As you can see, none of these variables can be found just by inspecting the property from the outside.
Myth: Because consumers pay for appraisal reports when applying for loans to purchase or refinance their house, they own their appraisal.
Fact: Unless a lender releases its interest in the report, it is legally owned by the lending company that ordered the appraisal. Due the Equal Credit Opportunity Act, any home buyer asking for a copy of the document must be provided with one by their lending agency.
Myth: Consumers need not be concerned with what is in their report so long as it exceeds the needs of their lending institution.
Fact: It is a very good idea for consumers to read a copy of their appraisal so that they can double-check the accuracy of the document, in case it's required to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can double as a record for the future, containing a great deal 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 area.
Myth: The only reason someone would order an appraisal is if a home needs its worth estimated in a lender-based sales transaction.
Fact: Appraisers can have many different qualifications and designations which allow them to provide a multitude of different services including - but not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: An appraisal report is no different than a home inspection report.
Fact: Appraisal reports are completely different than a home inspection. The reason behind an appraisal report is to conclude upon an opinion of fair market value during the appraisal process and the completion of the report. The point of a home inspector is to assess the condition of the house and its main components, then create a report on these findings.