Appraisal myths & facts
Legally, an appraiser is required to be state certified to perform legitimate real estate appraisals for federally-backed sales. Also by law, you are entitled to request a copy of the completed appraisal from your lending agency. Contact us if you have any concerns about the appraisal process.
Myth: The value that is assessed by the appraiser is required to be the same as the market value.
Fact: This usually isn't true; most states do support the suggestion that the assessed value is the same as market value, but not always. At times when interior remodeling has been done and the assessor is unaware of the improvement or properties in the area have not been reassessed for quite a while, it may vary wildly.
Myth: Depending on whether the appraisal is ordered for the buyer or the seller, the value of the home will vary.
Fact: The appraiser has no personal interest in the outcome of the appraisal and should complete services with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: The replacement value of the property should be is on par with the market value.
Fact: Without any suggestion from any external parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a specific home. The replacement cost is the dollar amount necessary to rebuild a house in-kind.
Myth: Appraisers use a calculation, like a specific price per square foot, to figure out the value of a house.
Fact: An appraisal report is an amalgamation of information based on the house's size, location, proximity to certain facilities, the condition of the home and the value of recent comparable sales. You can rely on Associate Appraisers of America's appraisers to be ethical in assessing this information.
Myth: In a strong economy - when the values of properties in a given region are reported to be increasing by a certain percentage - the costs of individual houses in the proximity can be expected to appreciate by that same percentage.
Fact: Any price at which an appraiser arrives concerning a particular house is always individualized, based on certain factors pulled from the data of comparable homes and other specifications within the home itself. It makes no difference whether the economy is good or poor.
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Myth: Just looking at what the house looks like on its exterior gives an excellent idea of its cost.
Fact: There are a number of different factors that show the value of a home; these factors include area, condition, improvements, amenities, and market trends. As you can see, none of these things can be found simply by viewing the home from the exterior.
Myth: Since the consumer is the one who provides the funding to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report is theirs.
Fact: Legally, the report is owned by the lending company unless the lender releases their interest in the document. Because of the Equal Credit Opportunity Act, any consumer demanding a copy of the appraisal report must be given it by their lender.
Myth: Home buyers need not care about what is in their document so long as it meets the necessities of their lending institution.
Fact: A home buyer should definitely read through their document; there might be some questions or some concerns about the accuracy of the appraisal report that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes an excellent record for future reference, comprised of helpful and often-revealing information - 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 vicinity.
Myth: There is no reason to order an appraisal unless you are trying to get an estimate of the cost of a property during a sales transaction involving a lending agency.
Fact: Hiring an appraiser can fulfill a variety of requirements depending on the designations and certifications of the appraiser involved; appraisers can provide a great deal of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: An appraisal is the same as a home inspection.
Fact: A home inspection report serves a completely different purpose than an appraisal. The point of an appraisal report is to form an opinion of fair market value during the appraisal process and the production of the appraisal. The task of a home inspector is to approximate the condition of the property and its main components, then write a report on these conclusions.
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