Appraisal myths debunked
By law, an appraiser must be state-licensed to perform appraisals for federally-backed transactions. You are also entitled by law to acquire a copy of the finished appraisal report from your lending agency. Contact us if you have any questions about the appraisal procedure.
Myth: Market value will be similar to the assessed value of the property.
Fact: While most states back the concept that assessed value approximates estimated market value, this often is not the case. Interior reconstruction that the assessor is not aware of and a dearth of reassessment on nearby properties are excellent examples of why there might be a differential in price.
Myth: Depending on whether the appraisal is produced for the buyer or the seller, the cost of the property will vary.
Fact: There is no personal interest on the part of the appraiser in the outcome of the analysis, therefore he will conduct his work with impartiality and independence, despite for whom the appraisal is created.
Myth: The replacement cost of the home should be is on par with the market value.
Fact: The way market value is found is based on what a home buyer would be willing to pay a willing seller for a house without being under pressure from any external party to buy or sell. If the property were rebuilt, the dollar amount required to do so would be the replacement cost.
Myth: Appraisers use a calculation, such as a specific price per square foot, to come to the worth of a property.
Fact: There are many different processes that an appraiser will use to make an in-depth analysis of every factor pertaining to the home, such as the size, location, condition, how close it is to undesirable facilities and the opinion of value of recently sold comparable houses.
Myth: As houses appreciate by a specific percentage - in a robust economic state - the properties around the appreciating properties are figured to appreciate by the same amount.
Fact: Any price at which an appraiser arrives concerning a certain house is always personalized, based on certain factors concluded from the data of comparable homes and other considerations within the house itself. This is true in good economic times as well as bad.
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Myth: Just seeing what the property looks like on its exterior gives an idea of its value.
Fact: There are a multitude of different factors that determine the value of a house; these factors include location, condition, improvements, amenities, and market trends. There's no real way to get all of this data from simply looking at the property from the exterior.
Myth: Because the consumer is the party who provides the funding to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal belongs to them.
Fact: Unless a lending agency releases its interest in the report, it is legally owned by the lending agency that purchased the appraisal. Consumers must be provided with a version of the document upon written request due to the Equal Credit Opportunity Act.
Myth: It doesn't concern consumers what's in the appraisal report so long as it meets the necessities of their lender.
Fact: Only if home buyers read a copy of their 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. Also, the appraisal report makes an invaluable record for future reference, comprised of helpful and often-revealing 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 vicinity.
Myth: The only reason someone would order an appraisal is if a house needs its value assessed in a lender-based sales transaction.
Fact: Depending upon their qualifications and designations, appraisers can and may perform a variety of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal report is no different than a home inspection.
Fact: A home inspection has a completely different purpose than an appraisal. The purpose of the appraiser is to come to an opinion of value in the appraisal process and through creating the report. House inspectors will create a report that will show the condition of the property and its major components and possible damage.