Common myths about appraising
Legally, a real estate appraiser must be state certified to produce legitimate appraisal reports for federally-backed sales. The law entitles you to get a copy of your finished appraisal report from your lender after it has been provided. Contact our professional staff if you have any questions about the appraisal procedure.
Myth: The value that is assessed by the appraiser is required to be exactly the same as the market value.
Fact: While most states support the suggestion that assessed value is the same as estimated market value, this generally is not the case. Interior remodeling that the assessor is unaware of and a dearth of reassessment on nearby properties are prime examples of why there might be a differential in price.
Myth: The opinion of value of a property will be different depending upon whether the appraisal is conducted for the buyer or the seller.
Fact: The appraiser has no personal interest in the result of the appraisal and should conduct his task with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: The replacement cost of the house is always is on par with the market value.
Fact: Market value is acquired by what a willing buyer would be interested in paying a willing seller for a certain property, with neither being under pressure to buy or sell. Replacement cost is the dollar amount required to rebuild a property in-kind.
Myth: Appraisers use a formula, like a specific price per square foot, to conclude the worth of a property.
Fact: Appraisers make a detailed analysis of all factors pertaining to the worth of a house, including its location, condition, size, proximity to facilities and recent costs of comparable houses.
Myth: In a strong economy - when the sales prices of homes in a given region are reported to be increasing by a particular percentage - the values of individual houses in the area can be expected to appreciate by that same percentage.
Fact: Any price at which an appraiser concludes in regards to a certain house is always individualized, based on certain factors found from the data of comparable houses and other considerations within the property itself. This is true in good economic times as well as bad.
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Myth: The house's exterior is determinate of the actual value of the house; there is no need to do an interior inspection.
Fact: Home value is concluded by a number of factors, including location, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from just looking at the house from the exterior.
Myth: Because the consumer is the one who puts up the capital to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal report is theirs.
Fact: The appraisal report is, in fact, legally owned by the lending agency - unless the lender "relinquishes its interest" in the appraisal report. Consumers have to be supplied with a version of the appraisal report upon written request as per the Equal Credit Opportunity Act.
Myth: Home buyers need not worry about what is in their report so long as it satisfies the needs of their lending company.
Fact: Only if home buyers examine 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 appraisal report can double as a record for the future, as it contains an exorbitant 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: The only reason someone would hire an appraiser is if a house needs its price estimated in a lender sales transaction.
Fact: Based upon their qualifications and designations, appraisers can and often do perform a series of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: There's no reason to get an appraisal if you order a home inspection.
Fact: A home inspection has a completely different purpose than an appraisal. The function of an appraisal is to find an opinion of fair market value during the appraisal process and the production of the report. A home inspector assesses the condition of the home and its major components and reports their findings.