Appraisal myths & facts
It is enforced by the government that an appraiser must be state-licensed to create appraisals for federally-related real estate transactions in Maryland. You are also entitled by law to receive a copy of the completed appraisal from your lender. Contact Astute Appraisals, Inc. if you have any concerns about the appraisal process.
Myth: The value that is assessed by the appraiser is required to be equivalent to the market value.
Fact: This is not often the case; most states do support the concept that the assessed value is the same as market value, but not always. Interior remodeling that the assessor has not investigated and a lack of reassessment on nearby houses are perfect examples of why there might be a differential in price.
Myth: The buyer or the seller sometimes may have impact in the value of the home depending upon for whom the appraiser is working.
Fact: The cost of the property does not affect the pay of the appraiser; as such, the appraiser has no vested interest in the worth of the house. This means that he will provide services with impartiality and independence regardless for whom the appraisal is provided.
Myth: Any time market value is found, it should equal the replacement cost of the house.
Fact: The way market value is derived is based on what a buyer would be willing to pay a willing seller for a home without being under pressure from any external group to purchase or sell. The dollar amount necessary to rebuild a house is what shows the replacement cost.
Myth: Certain formulae, like the price per square foot, are the ways appraisers use to ascertain the price of a home.
Fact: An appraisal is an amalgamation of information concluded from the property's size, location, proximity to undesirable facilities, the condition of the property and the value of recent comparable sales. You can rely on Astute Appraisals, Inc.'s appraisers to be ethical in assessing this data.
Myth: As houses increase their worth by a certain percentage - in a strong economy - the properties within the same neighborhood are expected to increase by the same amount.
Fact: Worth increase of a certain home is always determined on a case-by-case basis, factoring in information on comparable properties and other relevant considerations. This is true in excellent economic times as well as bad.
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Myth: The home's exterior is determinate of the actual value of the house; there is no need to do an interior appraisal.
Fact: House value is determined by a number of variables, including location, condition, improvements, amenities, and market trends. There's no real way to get all of this information from just looking at the home from the outside.
Myth: Because consumers pay for appraisals when applying for loans to buy or refinance real estate, they own their appraisal.
Fact: Unless a lending agency releases its interest in the report, it is legally owned by the lending agency that ordered the appraisal. Because of the Equal Credit Opportunity Act, any consumer requesting a copy of the report must be given it by their lender.
Myth: There's no reason for consumers to even care about what the report contains so long as their lender is fine with the contents therein.
Fact: A consumer should definitely inspect their report; there will probably be some questions or some concerns with the accuracy of the inspection that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can double as a record for the future, containing an incredible amount of information - 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 proximity.
Myth: The only reason someone would hire an appraiser is if a property needs its price assessed in a lender sales transaction.
Fact: Ordering an appraisal can fulfill a variety of requirements depending on the designations and certifications of the appraiser involved; appraisers can provide a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: A property inspection serves the same purpose as an appraisal.
Fact: An appraisal does not serve the same purpose as an inspection report. The purpose of an appraisal is to conclude upon an opinion of fair market value during the appraisal process and the production of the appraisal report. A home inspector determines the condition of the house and its main components and reports these findings.