Common myths about appraising
By law, an appraiser needs to be state-licensed to produce appraisals for federally-backed sales. You have the ability to request a copy of the completed report from your lending agency. Contact our professional staff if you have any concerns about the appraisal process.
Myth: Market value should be the same as the assessed value of the property.
Fact: It is probable that Colorado, like most states, validates the common myth that the assessed value equals the market value; however, this is sometimes the exception rather than the rule. Interior remodeling that the assessor has not investigated and a lack of reassessment on nearby homes are perfect examples of why the price can vary.
Myth: Depending on whether the appraisal is ordered for the buyer or the seller, the appraised value of the home will vary.
Fact: The value of the property does not affect the pay of the appraiser; as a result, the appraiser has no personal interest in the opinion of value of the house. Obviously, he will render services with impartiality and objectivity regardless for whom the appraisal is conducted.
Myth: The replacement value of the property should be is on par with the market value.
Fact: Market value is arrived at through what a willing buyer would likely pay a willing seller for a particular home, with neither being under pressure to buy or sell. If the property were rebuilt, the dollar amount needed to do so would set the replacement cost.
Myth: Appraisers use a formula, like a certain price per square foot, to conclude the value of a home.
Fact: There are many differing calculations that an appraiser will use to make an in-depth analysis of every factor in consideration of the home, such as the size, location, condition, how close it is to undesirable facilities and the value of recently sold comparable properties.
Myth: When the economy is doing well and the sales prices of houses are found to be appreciating by a certain percentage, the other homes in the vicinity can be expected to increase based on that same percentage.
Fact: Any cost at which an appraiser concludes in regards to a certain house is always individualized, based on certain factors concluded from the data of comparable homes and other considerations within the home itself. It makes no difference whether the economy is strong or terrible.
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Myth: Just examining what the house looks like on its exterior gives an excellent idea of its cost.
Fact: There are a number of different factors that show property value; these factors include location, condition, improvements, amenities, and market trends. An outside-only inspection obviously can't provide all of the data necessary.
Myth: Because consumers fund appraisal reports when applying for loans to purchase or refinance their house, they legally own their appraisal.
Fact: Legally, the document is owned by the lending agency unless the lender releases their interest in the appraisal. However, consumers have to be supplied with a copy of the appraisal report upon written request, due to the Equal Credit Opportunity Act.
Myth: Home buyers need not worry about what is in their report so long as it satisfies the requirements of their lending institution.
Fact: Only if home buyers look through a copy of their appraisal 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, containing an incredible amount of data - including, but certainly 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: There is no reason to hire an appraiser unless you are trying to get an assessment of the price of a property during a sales transaction involving a lending institution.
Fact: Hiring an appraiser can fulfill a variety of necessities 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 report is no different than a home inspection.
Fact: Appraisal reports have almost nothing in common with a home inspection report. An appraiser forms an opinion of value in the appraisal process and resulting appraisal. The task of a home inspector is to approximate the condition of the home and its major components, then compose a report on these inspection.