Appraisal myths debunked
By law, an appraiser must be state-licensed to produce appraisals for federally-supported transactions. You have the ability to receive a copy of the completed appraisal report from your lending agency. Contact Astute Appraisals, Inc. if you have any concerns about the appraisal process.
Myth: Assessed value generally will equate to market value.
Fact: This is not often the case; 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 does not know about the improvements, or when properties in the area have not been reassessed for an extended period.
Myth: Depending on if the appraisal is written for the buyer or the seller, the cost of the property will vary.
Fact: The appraiser has no vested interest in the result of the appraisal report and should render his task with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Market value will equate to replacement cost.
Fact: Market value is based on what a willing buyer would be interested in paying a willing seller for a certain property, with neither being under undue influence to buy or sell. If the property were reconstructed, the dollar amount needed to do so would make up the replacement cost.
Myth: There are certain methods that real estate appraisers use to determine the opinion of value of a home, like the price per square foot.
Fact: Appraisers complete a full analysis of all factors pertaining to the worth of a property, including its location, condition, size, proximity to facilities and recent costs of comparable properties.
Myth: As properties appreciate by a certain percentage - in a strong economic state - the homes within the same neighborhood are expected to appreciate by the same amount.
Fact: Any price at which an appraiser arrives concerning a particular house is always individualized, based on certain factors found from the information of comparable homes and other specifications within the house itself. This is true in good economic times as well as poor.
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Myth: The home's exterior is determinate of the actual value of the home; it is unnecessary to do an interior inspection.
Fact: There are a number of different factors that conclude the value of a home; these factors include location, condition, improvements, amenities, and market trends. There's no real way to get all of this information from just inspecting the property from the outside.
Myth: Considering that the consumer is the party who provides the funding to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal is theirs.
Fact: Legally, the document is owned by the lender unless the lender relinquishes their interest in the report. However, consumers must be supplied with a copy of the report upon written request, due to the Equal Credit Opportunity Act.
Myth: It doesn't concern consumers what's in the appraisal so long as it meets the necessities of their lending agency.
Fact: Only if consumers check out a copy of their 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. There is a wealth of data contained in an report that can be useful to the home buyer 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 area.
Myth: There is no reason to order an appraisal unless you are trying to get an assessment of the worth of a property during a sales transaction involving a lending agency.
Fact: Appraisers can have many varied qualifications and designations which allow them to perform a series of different services including - but definitely not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: An appraisal report is no different than a home inspection report.
Fact: An appraisal does not serve the same purpose as an inspection. The appraiser forms an opinion of value in the appraisal process and resulting appraisal report. The task of a home inspector is to approximate the condition of the house and its major components, then create a report on their findings.