Appraisal myths & facts
It is required by law that an appraiser must be state-licensed to perform appraisals for federally-related real estate sales in Illinois. The law allows you to get a copy of your finished report from your lending agency after it has been provided. Contact Corrie Appraisal & Consulting, Inc. if you have any concerns about the appraisal process.
Myth: Market value must be similar to the assessed value of the property.
Fact: While most states back the idea that assessed value is equal to estimated market value, this commonly is not the case. Interior remodeling that the assessor is not aware of and a lack of reassessment on nearby properties are prime examples of why there might be a differential in price.
Myth: The appraised value of a house will change depending upon whether the appraisal is provided for the buyer or the seller.
Fact: There is no vested interest on the part of the appraiser in the outcome of the appraisal, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is created.
Myth: Market value will equate to replacement cost.
Fact: Market value is arrived at through what a willing buyer would be interested in paying a willing seller for a particular home, with neither being under undue influence to buy or sell. If the house were reconstructed, the dollar amount required to do so would be the replacement cost.
Myth: Certain methods, like the price per square foot of the property, are the ways appraisers use to determine the worth of a house.
Fact: There are many varied formulae that an appraiser will use to make a comprehensive analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to certain facilities and the value of recently sold comparable homes.
Myth: As properties appreciate by a certain percentage - in a robust economy - the properties around the appreciating properties are figured to appreciate by the same amount.
Fact: Worth appreciation of a certain home must be concluded on an individualized basis, factoring in information on comparable houses and other relevant considerations. This is true in good economic times as well as bad.
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Myth: Just seeing what the house looks like on the outside gives an excellent idea of its value.
Fact: House value is concluded by a number of factors, including area, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from simply viewing the property from the exterior.
Myth: Considering that the consumer is the person who provides the funding to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal belongs to them.
Fact: Unless a lending agency releases its vestment in the document, it is legally owned by the lending agency that ordered the appraisal. Consumers must be provided with a copy of the document upon written request as per the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the report so long as it meets the needs of their lending agency.
Fact: A consumer should definitely read through their appraisal; there might be some questions or some concerns about the accuracy of the analysis that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can double as a record for the future, since it contains an incredible amount of 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 area.
Myth: There is no reason to order an appraisal unless you are trying to get an estimate of the price of a property during a sales transaction involving a lender.
Fact: Appraisers can have many different qualifications and designations which allow them to provide a series of different services including - but 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: An appraisal does not serve the same purpose as an inspection. The task of the appraiser is to form an opinion of value in the appraisal process and through producing the report. A home inspector assesses the condition of the house and its main components and reports these findings.