Common myths about appraising
It is required by law that an appraiser is required to be state-licensed to perform appraisals for federally-related real estate purchases in California. The law gives you the right to receive a copy of your completed appraisal from your lender after it has been produced. Contact Premier Appraisal of SoCal if you have any questions about the appraisal procedure.
Myth: Market value will always be equivocal to the assessed value of the property.
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 sometimes the exception rather than the rule. Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby properties are prime examples of why there might be a differential in price.
Myth: The opinion of value of a house will differ depending upon whether the appraisal is ordered for the buyer or the seller.
Fact: The appraised value of the home does not affect the payment of the appraiser; as a result, the appraiser has no preconceived interest in the opinion of value of the home. This means that he will render task with impartiality and independence regardless for whom the appraisal is conducted.
Myth: Any time market value is found, it should equate to the replacement cost of the property.
Fact: The way market value is arrived at is based on what a buyer would likely pay a willing seller for a property without being under pressure from any outside group to purchase or sell. The dollar amount necessary to rebuild a property is what shows the replacement cost.
Myth: There are certain ways that real estate appraisers use to show the cost of a home, such as the price per square foot.
Fact: There are many different formulae that an appraiser will use to make a detailed analysis of every factor pertaining to the home, such as the size, location, condition, how close it is to certain facilities and the opinion of value of recently sold comparable homes.
Myth: When the economy is on the rise and the value of homes are found to be increasing by a certain percentage, the other houses in the vicinity can be expected to rise based on that same percentage.
Fact: Price appreciation of a specific home is always determined on a case-by-case basis, factoring in information on comparable homes and other relevant considerations. It makes no difference whether the economy is powerful or terrible.
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Myth: Just examining what the property looks like on the outside gives a good idea of its value.
Fact: There are a multitude of different variables that show property value; these factors include area, condition, improvements, amenities, and market trends. An external inspection definitely can't provide all of the information needed.
Myth: Because consumers pay for appraisal reports when applying for loans to purchase or refinance real estate, they own their appraisal.
Fact: The appraisal is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the report. However, consumers have to be provided with a copy of the appraisal upon written request, because of the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the appraisal report so long as it satisfies the needs of their lender.
Fact: A consumer should definitely read through their report; there will probably 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. There is a wealth of data contained in an appraisal that could be useful to the home buyer 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: There is no reason to order an appraisal unless you are trying to get an assessment of the value of a home during a sales transaction involving a lending institution.
Fact: Depending upon their qualifications and designations, appraisers can and often do provide a series of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal report is the same as a home inspection.
Fact: A home inspection serves a completely different purpose than an appraisal report. The task of the appraiser is to find an opinion of value in the appraisal process and through writing the report. A home inspector analyzes the condition of the home and its main components and reports these findings.