Common myths about appraising
Legally, an appraiser has to be state certified to create legitimate appraisal reports for federally-backed sales. The law entitles you to receive a copy of your finished report from your lender after it has been provided. Contact our professional staff if you have any concerns about the appraisal process.
Myth: Assessed value generally will be the same as to market value.
Fact: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. Interior reconstruction that the assessor is not aware of and a lack of reassessment on nearby properties are perfect examples of why there might be a differential in price.
Myth: The buyer or the seller will have impact in the cost of the home depending upon for whom the appraiser is working.
Fact: The appraised value of the home does not affect the pay of the appraiser; due to this, the appraiser has no preconceived interest in the opinion of value of the property. This means that he will complete his business with impartiality and objectivity regardless for whom the appraisal is created.
Myth: Any time market value is found, it should equal the replacement cost of the property.
Fact: Without any pressure from any external parties to buy or sell, market value is what a willing buyer would pay a willing seller for a specific house. If the house were rebuilt, the dollar amount necessary to do so would set the replacement cost.
Myth: There are certain methods that appraisers use to find the value of a property, such as the price per square foot.
Fact: There are many differing calculations that an appraiser will use to make a detailed investigation of every factor in consideration of the home, such as the size, location, condition, how close it is to undesirable facilities and the sales price of recently sold comparable houses.
Myth: When the economy is doing well and the cost of homes are found to be increasing by a certain percentage, the other homes in the vicinity can be expected to rise based on that same percentage.
Fact: Any cost at which an appraiser concludes concerning a particular property is always personalized, based on certain factors derived from the information of comparable homes and other considerations within the property itself. This is true in strong economic times as well as bad.
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Myth: You can generally see what a house is worth simply by looking at the exterior.
Fact: To determine an accurate value beyond all doubt, an appraiser must examine the property on a variety of factors based on area, condition, improvements, amenities, and market trends. Obviously, none of these things can be derived just by viewing the property from the outside.
Myth: Considering that the consumer is the party who provides the money to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.
Fact: Legally, the document is owned by the lending company unless the lender releases their interest in the report. However, home buyers must be supplied with a copy of the appraisal report upon written request, under the Equal Credit Opportunity Act.
Myth: Consumers need not care about what is in their appraisal so long as it exceeds the needs of their lending group.
Fact: Only if home buyers read a copy of their appraisal report 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. An report can double as a record for the future, since it contains an exorbitant amount of data - 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: Appraisals are ordered only to estimate home values in property sales involving mortgage-lending deals.
Fact: Appraisers can have many different qualifications and designations which allow them to perform a variety 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: There's no need to get an appraisal if you order a home inspection.
Fact: A home inspection serves a completely different purpose than an appraisal. The task of the appraiser is to arrive at an opinion of value in the appraisal process and through producing the report. A home inspector determines the condition of the house and its main components and reports these findings.