Appraisal myths debunked
Legally, a real estate appraiser needs to be state certified to perform legitimate appraisal reports for federally-related transactions. The law allows you to get a copy of your finished appraisal from your lending agency after it has been provided. Contact our professional staff if you have any questions about the appraisal procedure.
Myth: Market value has to be similar to the assessed value of the property.
Fact: While most states support the concept that assessed value equates estimated market value, this commonly is not the case. Examples include when interior reconstruction has happened and the assessor does not know about the improvements, or when properties in the area have not been reassessed for an prolonged period.
Myth: The buyer or the seller can have an influence in the cost of the property depending upon for whom the appraiser is working.
Fact: The appraiser has no personal interest in the result of the appraisal report and should conduct his job with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Any time market value is found, it should equal the replacement cost of the house.
Fact: Market value is arrived at through what a willing buyer would likely pay a willing seller for a specific home, with neither being under duress to buy or sell. If the home were reconstructed, the dollar amount necessary to do so would be the replacement cost.
Myth: Specific formulae, such as the price per square foot of the property, are the methods appraisers use to ascertain the cost of a property.
Fact: Appraisers make a detailed analysis of all factors in consideration to the worth of a house, including its location, condition, size, proximity to facilities and recent worth of comparable houses.
Myth: As homes increase their worth by a certain percentage - in a robust economic state - the homes in proximity are expected to increase by the same amount.
Fact: Any cost at which an appraiser concludes in regards to a certain house is always personalized, based on certain factors derived from the information of comparable properties and other considerations within the house itself. It makes no difference whether the economy is strong or bad.
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Myth: The house's outside is determinate of the actual price of the house; it is unnecessary to do an interior appraisal.
Fact: There are a multitude of different factors that determine the value of a home; these factors include area, condition, improvements, amenities, and market trends. There's no real way to get all of this information from just looking at the property from the outside.
Myth: Since you're the one providing the money for the appraisal when applying for the loan to buy or refinance your home, you own the ordered appraisal.
Fact: The appraisal is, in fact, legally owned by the lending agency - unless the lender "relinquishes its interest" in the appraisal report. Under the Equal Credit Opportunity Act, any home buyer asking for a copy of the report must be given one by their lending agency.
Myth: Consumers need not be concerned with what is in their document so long as it exceeds the needs of their lending company.
Fact: A consumer should definitely look through their document; there might be some questions or some worries with the accuracy of the analysis that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes a valuable record for future reference, comprised of useful and often-revealing information - including 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 home needs its price assessed in a lender-based sales transaction.
Fact: Appraisers can have many different qualifications and designations which allow them to provide a variety 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: A property inspection serves the same purpose as an appraisal.
Fact: Appraisal reports have almost nothing in common with a home inspection report. The job of the appraiser is to conclude an opinion of value in the appraisal process and through producing the report. A home inspector assesses the condition of the property and its main components and reports their findings.