Common myths about appraising
It is required by law that a real estate appraiser needs to be state-licensed to produce appraisals for federally-supported home transactions in Colorado. Also by law, you are entitled to request a copy of the completed appraisal from your lending agency. Contact our professional staff if you have any concerns about the appraisal procedure.
Myth: Assessed value should be the same as to market value.
Fact: This usually isn't true; 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 occurred and the assessor is unaware of the improvements, or when homes in the area have not been reassessed for an extended time.
Myth: The buyer or the seller often will have some pull in the value of the home depending upon for whom the appraiser is working.
Fact: The value of the property does not affect the payment of the appraiser; because of this, the appraiser has no personal interest in the opinion of value of the property. Obviously, he will render services with impartiality and objectivity regardless for whom the appraisal is conducted.
Myth: Market value should equal replacement cost.
Fact: The way market value is arrived at is based on what a home buyer would be willing to pay a willing seller for a home without being under duress from any outside party to purchase or sell. The dollar amount necessary to reconstruct a property is what forms the replacement cost.
Myth: Certain methods, like the price per square foot, are the ways appraisers use to ascertain the value of a home.
Fact: Appraisers complete an exhaustive analysis of all factors in consideration to the worth of a house, including its location, condition, size, proximity to facilities and recent sale prices of comparable homes.
Myth: In a strong economy - when the values of homes in a given region are found to be rising by a certain percentage - the values of individual properties in the proximity can be expected to rise by that same percentage.
Fact: All appreciation of worth is on an individual basis, found by information on relevant conditions and the data of comparable houses. It makes no difference if the economy is good or terrible.
Have other questions about appraisers, appraising or real estate in Larimer County or Fort Collins, CO?Contact Robert L Ripp, SRA
Myth: The home's exterior is determinate of the actual value of the home; there is no need to do an interior inspection.
Fact: Property value is determined by a number of variables, including - but not limited to - location, condition, improvements, amenities, and market trends. As you can see, none of these variables can be found simply by examining the property from the outside.
Myth: Because the consumer is the party who provides the capital to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal is theirs.
Fact: Unless a lender releases its vestment in the appraisal report, it is legally owned by the lending company that purchased the appraisal. Under the Equal Credit Opportunity Act, any home buyer demanding a copy of the appraisal report must be provided with it by their lending company.
Myth: Home buyers need not be concerned with what is in their appraisal report so long as it satisfies the needs of their lending agency.
Fact: Only if consumers read a copy of their appraisal report can they ensure 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 wealth of information contained in an appraisal report that will probably 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 vicinity.
Myth: Appraisers are hired only to estimate building values in property sales involving mortgage-lending deals.
Fact: Ordering an appraisal can fulfill a variety of needs 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: An appraisal is the same as a home inspection report.
Fact: Appraisal reports are nothing like a home inspection report. An appraiser finds an opinion of value in the appraisal process and resulting appraisal. A home inspector analyzes the condition of the home and its main components and reports their findings.