Common myths about appraising
Legally, a real estate appraiser has to be state certified to produce substantiated appraisal reports for federally-backed transactions. The law entitles you to get a copy of your completed appraisal from your lending agency after it has been produced. Contact us if you have any concerns about the appraisal process.
Myth: Market value must be the same as the assessed value of the property.
Fact: While most states uphold the idea that assessed value is the same as estimated market value, this commonly is not the case. Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby homes are excellent examples of why the price can vary.
Myth: The opinion of value of a property will differ depending upon whether the appraisal is conducted for the buyer or the seller.
Fact: The cost of the property does not affect the pay of the appraiser; due to this, the appraiser has no pressured interest in the worth of the property. Obviously, he will conduct business with impartiality and objectivity regardless for whom the appraisal is conducted.
Myth: Market value will equate to replacement cost.
Fact: Market value is based on what a willing buyer would be interested in paying a willing seller for a specific house, with neither being under pressure to buy or sell. The replacement cost is the dollar amount necessary to rebuild a house in-kind.
Myth: Specific formulae, like the price per square foot, are the methods appraisers use to ascertain the value of a house.
Fact: There are many varied ways that an appraiser will use to make a comprehensive investigation of every factor pertaining to the property, such as the size, location, condition, how close it is to undesirable facilities and the opinion of value of recently sold comparable homes.
Myth: In a strong economy - when the values of houses in a given region are reported to be appreciating by a particular percentage - the costs of individual houses in the area can be expected to appreciate by that same percentage.
Fact: Any worth at which an appraiser concludes concerning a specific home is always personalized, based on certain factors pulled from the data of comparable properties and other considerations within the house itself. This is true in fair economic times as well as bad.
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Myth: The property's exterior is determinate of the actual value of the house; there is no need to do an interior appraisal.
Fact: Property worth is determined by a multitude of variables, including location, condition, improvements, amenities, and market trends. There's no real way to get all of this information from simply inspecting the home from the outside.
Myth: Because the consumer is the party 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 document is owned by the lending company unless the lender relinquishes their interest in the report. Under the Equal Credit Opportunity Act, any consumer asking for a copy of the appraisal report must be provided with one by their lending agency.
Myth: Consumers need not worry about what is in their appraisal report so long as it meets the requirements of their lending group.
Fact: It is very important for consumers to peruse a copy of their appraisal so that they can double-check the accuracy of the report, 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 useful and often-revealing data - including 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: Appraisals are ordered only to estimate house values in house sales involving mortgage-lending deals.
Fact: Appraisers can have many varied qualifications and designations which allow them to perform a lot of different services including - but definitely not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: You don't need to get an appraisal if you have had a home inspection.
Fact: A home inspection report has a completely different purpose than an appraisal. The point of an appraisal is to arrive at an opinion of fair market value during the appraisal process and the completion of the appraisal. House inspectors will produce a report that will determine the condition of the property and its major components and possible damage.