Appraisal myths & facts
Legally, an appraiser must be state certified to create legitimate appraisal reports for federally-supported purchase. The law allows you to acquire a copy of your finished report from your lending agency after it has been provided. Contact our professional staff if you have any questions about the appraisal process.
Myth: Market value should be similar to the assessed value of the property.
Fact: While most states uphold the concept that assessed value is the same as estimated market value, this usually is not the case. Examples include when interior reconstruction has occurred and the assessor has not seen the improvements, or when properties in the vicinity have not been reassessed for an prolonged period.
Myth: Depending on if the appraisal is written for the buyer or the seller, the cost of the property will vary.
Fact: There is no personal interest on the part of the appraiser in the outcome of the analysis, therefore he will complete his work with impartiality and independence, regardless for whom the appraisal is created.
Myth: Market value should approximate replacement cost.
Fact: Market value is found by what a willing buyer would likely pay a willing seller for a particular home, with neither being under pressure to buy or sell. Replacement cost is the dollar amount required to rebuild a home in-kind.
Myth: Specific formulae, such as the price per square foot of the property, are the methods appraisers use to arrive at the value of a home.
Fact: Appraisers make an exhaustive analysis of all factors pertaining to the cost of a house, including its location, condition, size, proximity to facilities and recent opinion of value of comparable homes.
Myth: As properties increase their worth by a specific percentage - in a robust economic state - the houses around the appreciating properties are figured to increase by the same amount.
Fact: Any cost at which an appraiser concludes concerning a certain house is always personalized, based on certain factors pulled from the information of comparable houses and other considerations within the property itself. This is true in good economic times as well as poor.
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Myth: Just examining what the property looks like on its exterior gives an idea of its value.
Fact: There are a multitude of different variables that show the value of a house; these factors include location, condition, improvements, amenities, and market trends. An external inspection obviously can't provide all of the data necessary.
Myth: Considering that the consumer is the party who provides the funding to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal belongs to them.
Fact: Unless a lending agency releases its interest in the document, it is legally owned by the lending agency that purchased the appraisal. Consumers must be given a version of the document through request as per the Equal Credit Opportunity Act.
Myth: It doesn't concern consumers what's in the report so long as it satisfies the requirements of their lender.
Fact: It is a very good idea for home buyers to check over a copy of their appraisal so that they can double-check the accuracy of the document, in case they need to question its veracity. 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, filled with helpful and often-revealing data - including, but 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 home needs its worth estimated in a lender-based sales transaction.
Fact: Appraisers can have many different qualifications and designations which allow them to provide a multitude 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: An appraisal is no different than a home inspection report.
Fact: An appraisal report does not fulfill the same purpose as an inspection. An appraiser forms an opinion of value in the appraisal process and resulting report. A home inspector analyzes the condition of the home and its major components and reports these findings.
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