Common myths about appraising
It is required by legal agencies that a real estate appraiser must be state-licensed to write appraisal reports for federally-supported home sales in Colorado. The law entitles you to acquire a copy of your completed report from your lender after it has been provided. Contact Robert L Ripp, SRA if you have any concerns about the appraisal procedure.
Myth: Market value should be similar to the assessed value of the property.
Fact: It is possible that Colorado, like most states, validates the common myth that the assessed value equals the market value; however, this is not always true. Interior remodeling that the assessor is not aware of and a dearth of reassessment on nearby properties are prime examples of why this occurs.
Myth: The value of a home will change depending upon if the appraisal is conducted for the buyer or the seller.
Fact: There is no vested interest on the part of the appraiser in the result of the report, therefore he will complete his work with impartiality and independence, regardless for whom the appraisal is conducted.
Myth: Any time market value is established, it should equate to the replacement cost of the property.
Fact: Market value is found by what a willing buyer would likely pay a willing seller for a certain property, with neither being under pressure to buy or sell. The replacement cost is the dollar amount required to reconstruct a property in-kind.
Myth: There are certain methods that real estate appraisers use to determine the value of a home, such as the price per square foot.
Fact: Appraisers complete a comprehensive analysis of all factors in consideration to the cost of a property, including its location, condition, size, proximity to facilities and recent values of comparable properties.
Myth: When the economy is doing well and the cost 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: Worth increase of a specific home has to be concluded on an individualized basis, factoring in information on comparable houses and other relevant specifications within the home itself. It makes no difference whether the economy is robust or on the decline.
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Myth: The home's outside is determinate of the actual worth of the house; it is unnecessary to do an interior inspection.
Fact: There are a number of different variables that show property value; these factors include area, condition, improvements, amenities, and market trends. An external inspection definitely can't provide all of the data required.
Myth: Since you're the one coughing up the cash for the appraisal when applying for your loan to buy or refinance real estate, you own the ordered appraisal report.
Fact: Legally, the report is owned by the lending company unless the lender releases their interest in the appraisal. However, home buyers must be given a copy of the document upon written request, under the Equal Credit Opportunity Act.
Myth: It doesn't concern consumers what's in the appraisal report so long as it meets the requirements of their lending agency.
Fact: Only if consumers look over 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 serve as a record for the future, containing an incredible amount of information - 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 proximity.
Myth: The only reason someone would hire an appraiser is if a property needs its cost estimated in a lender-based sales transaction.
Fact: Appraisers can have many different qualifications and designations which allow them to provide a lot of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: You shouldn't need to get an appraisal if you have had a home inspection.
Fact: An appraisal report does not fulfill the same purpose as an inspection. The function of an appraisal is to form an opinion of fair market value during the appraisal process and the production of the report. A home inspector analyzes the condition of the property and its major components and reports these findings.