Myth: Assessed value should always equate market value.
Reality: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always.
Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby houses are prime examples of why there might be a differential in price.
Myth: Depending on whether the appraisal is done for the buyer or the seller, the opinion of value of the home will vary.
Reality: The cost of the property does not affect the pay of the appraiser; because of this, the appraiser has no personal interest in the price of the house. Obviously, he will conduct job with impartiality and independence regardless of for whom the appraisal is produced.
Myth: Market value should mirror replacement cost.
Reality: Market value is found by what a willing buyer would likely pay a willing seller for a particular property, with neither being under duress to buy or sell.
The replacement cost is the dollar amount needed to rebuild a home in-kind.
Myth: Certain formulae, such as the price per square foot, are what appraisers use to ascertain the value of a home.
Reality: There are many different calculations that an appraiser will use to make a full investigation of every factor pertaining to the house, such as the size, location, condition, how close it is to certain facilities and the values of recently sold comparable properties.
Myth: When the economy is robust and the sales prices of homes are reported to be appreciating by a certain percentage, the other houses in the proximity can be expected to appreciate based on that same percentage.
Reality: All increase of value is on a one-on-one basis, found by data on relevant elements and the data of comparable houses.
It doesn't matter if the economy is on the rise or declining.
Myth: Just looking at what the house looks like on its exterior gives an excellent idea of its value.
Reality: To determine a concrete value beyond all doubt, an appraiser must examine the property on a variety of factors based on area, condition, improvements, amenities, and market trends.
An external inspection certainly can't provide all of the information needed.
Myth: Because consumers fund appraisal reports when applying for loans to purchase or refinance their home, they legally own their appraisal report.
Reality: Legally, the appraisal is owned by the lender unless the lender relinquishes their interest in the appraisal.
However, home buyers have to be provided with a copy of the appraisal report upon written request, through the Equal Credit Opportunity Act.
Myth: It doesn't matter to consumers what's in the appraisal so long as it satisfies the requirements of their lending agency.
Reality: It is very important for home buyers to look at a copy of their report so that they can double-check the accuracy of the report, in case they need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make.
There is an incredible amount of data stored in an appraisal report that should 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 house during a sales transaction involving a lending agency.
Reality: Appraisers can have many different qualifications and designations which allow them to perform a lot 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 property inspection serves the same purpose as an appraisal.
Reality: An appraisal report does not serve the same purpose as an inspection.
The point of an appraisal is to find an opinion of market value during the appraisal process and the completion of the appraisal report.
The job of a home inspector is to find the condition of the home and its major components, then produce a report on these findings.