Appraisal myths & facts
It is required by legal agencies that a real estate appraiser is required to be state-licensed to create appraisal reports for federally-supported home sales in California. Also by law, you are allowed to request a copy of the completed appraisal from your lender. Contact Associate Appraisers of America if you have any questions about the appraisal process.
Myth: Assessed value should always equate to market value.
Fact: It might be that California, like most states, validates the idea that the assessed value equals the market value; however, this is not often the case. Interior remodeling that the assessor is unaware of and a dearth of reassessment on nearby homes are exact examples of why the price can vary.
Myth: Depending on if the appraisal is provided for the buyer or the seller, the appraised value of the property will vary.
Fact: There is no real interest on the part of the appraiser in the outcome of the appraisal, therefore he will complete his work with impartiality and independence, no matter for whom the appraisal is conducted.
Myth: Market value will approximate replacement cost.
Fact: Market value is found by what a willing buyer would likely pay a willing seller for a particular house, with neither being under pressure to buy or sell. If the house were reconstructed, the dollar amount required to do so would form the replacement cost.
Myth: Specific formulae, like the price per square foot of the property, are the methods appraisers use to ascertain the worth of a home.
Fact: An appraisal is an assertion of data concluded from the property's size, location, proximity to some facilities, the condition of the property and the cost of recent comparable sales. You can depend on Associate Appraisers of America's appraisers to be honest in assessing this data.
Myth: As homes appreciate by a specific percentage - in a strong economic state - the homes nearby are figured to increase by the same amount.
Fact: Worth increase of a specific property is always concluded on a case-by-case basis, factoring in information on comparable houses and other relevant considerations. It makes no difference if the economy is strong or bad.
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Myth: The house's exterior is determinate of the actual price of the home; it is unnecessary to do an interior inspection.
Fact: Property value is determined by a number of factors, including - but not limited to - area, condition, improvements, amenities, and market trends. Obviously, none of these variables can be derived just by viewing the property from the outside.
Myth: Since you're the one providing the money for the appraisal report when applying for the loan to purchase or refinance real estate, you own the provided appraisal.
Fact: Unless a lender releases its vestment in the appraisal report, it is legally owned by the lending agency that purchased the appraisal. By the Equal Credit Opportunity Act, any consumer asking for a copy of the document must be given it by their lending company.
Myth: There's no point for home buyers to even concern themselves with what the appraisal report contains so long as their lending company is fine with the contents therein.
Fact: Only if home buyers look over 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 great deal of data contained in an appraisal report that could be useful to the consumer 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 region.
Myth: There is no reason to hire an appraiser unless you are trying to get an estimate of the worth of a property during a sales transaction involving a lender.
Fact: Depending upon their qualifications and designations, appraisers can and will provide a multitude of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal report is the same as a home inspection report.
Fact: Appraisal reports have almost nothing in common with a home inspection. The task of the appraiser is to conclude an opinion of value in the appraisal process and through producing the report. A home inspector determines the condition of the house and its main components and reports their findings.
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