Appraisal myths & facts
By law, an appraiser is enforced to be state-licensed to produce appraisals for federally-related transactions. Also by law, you have the ability to request a copy of the completed appraisal report from your lender. Contact us if you have any questions about the appraisal process.
Myth: Assessed value should always be similar to to market value.
Fact: It is probable that California, like most states, validates the idea that the assessed value equals the market value; however, this is sometimes the exception rather than the rule. Interior remodeling that the assessor is not aware of and a lack of reassessment on nearby houses are prime examples of why the price can vary.
Myth: The buyer or the seller will have impact in the value of the home depending upon for whom the appraiser is working.
Fact: There is no vested interest on the part of the appraiser in the outcome of the analysis, therefore he will conduct his work with impartiality and independence, despite for whom the appraisal is ordered.
Myth: The replacement value of the home should be is on par with the market value.
Fact: The way market value is derived is based on what a home buyer would likely pay a willing seller for a property without being under duress from any external party to purchase or sell. If the property were rebuilt, the dollar amount necessary to do so would set the replacement cost.
Myth: Appraisers use a formula, such as a specific price per square foot, to conclude the cost of a property.
Fact: There are many varied methods that an appraiser will use to make a detailed analysis of every factor pertaining to the home, such as the size, location, condition, how close it is to specific facilities and the cost of recently sold comparable properties.
Myth: As homes increase their worth by a certain percentage - in a robust economic state - the properties nearby are expected to increase by the same amount.
Fact: Price increase of a specific property is always determined on an individualized basis, factoring in data on comparable houses and other relevant elements. It makes no difference if the economy is excellent or poor.
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Myth: The property's exterior is determinate of the actual price of the home; there is no need to do an interior appraisal.
Fact: Property worth is determined by a number of factors, including - but not limited to - area, condition, improvements, amenities, and market trends. There's no real way to get all of this information from just viewing the house from the outside.
Myth: Because the consumer is the person who puts up the money to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal is theirs.
Fact: Unless a lending agency releases its interest in the document, it is legally owned by the lending agency that purchased the appraisal. Due the Equal Credit Opportunity Act, any home buyer requesting a copy of the appraisal report must be provided with one by their lending agency.
Myth: It doesn't matter to consumers what's in the appraisal report so long as it meets the necessities of their lending agency.
Fact: It is almost imperative for home buyers to look at a copy of their appraisal report so that they can verify the accuracy of the document, in case it's required to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can double as a record for the future, containing an incredible amount of data - 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 area.
Myth: There is no reason to hire an appraiser unless you are trying to get an assessment of the price of a property during a sales transaction involving a lending company.
Fact: Depending upon their qualifications and designations, appraisers can and do provide a lot of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A property inspection serves the same purpose as an appraisal.
Fact: An appraisal report does not serve the same purpose as an inspection report. The function of an appraisal is to arrive at an opinion of fair market value during the appraisal process and the completion of the report. House inspectors will create a report that will determine the condition of the house and its major components and possible damage.
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