Appraisal myths debunked

By law, an appraiser is enforced to be state-licensed to produce appraisals for federally-backed sales. The law entitles you to acquire a copy of your finished appraisal from your lender after it has been produced. Contact us if you have any concerns about the appraisal procedure.

Myth: Market value has to be equivocal to the assessed value of the property.

Fact: It might be that Illinois, like most states, validates the idea that the assessed value is the same as the market value; however, this is not always true. Examples include when interior reconstruction has occurred and the assessor is unaware of the improvements, or when houses in the vicinity have not been reassessed for an prolonged time.

Myth: The buyer or the seller sometimes may have some pull in the value of the property depending upon for whom the appraiser is working.

Fact: There is no real interest on the part of the appraiser in the result of the appraisal report, therefore he will complete his work with impartiality and independence, regardless for whom the appraisal is written.

Myth: Any time market value is established, it should equate to the replacement cost of the home.

Fact: Market value is derived from what a willing buyer would likely pay a willing seller for a particular house, with neither being under undue influence to buy or sell. The dollar amount necessary to rebuild a property is what forms the replacement cost.

Myth: Appraisers use a calculation, like a specific price per square foot, to figure out the value of a house.

Fact: There are many numerous processes that an appraiser will use to make a detailed investigation of every factor pertaining to the property, such as the size, location, condition, how close it is to certain facilities and the cost of recently sold comparable properties.

Myth: In a strong economy - when the costs of properties in a given area are reported to be increasing by a certain percentage - the prices of individual homes in the proximity can be expected to appreciate by that same percentage.

Fact: All increase of worth is on a one-on-one basis, concluded by data on relevant considerations and the data of comparable homes. It doesn't matter if the economy is on the rise or declining.

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Myth: Just looking at what the property looks like on its exterior gives an idea of its worth.

Fact: House worth is concluded by a number of variables, 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 exterior.

Myth: Since you're the one providing the money for the appraisal report when applying for your loan to purchase or refinance your home, you own the produced appraisal report.

Fact: Legally, the appraisal report is owned by the lender unless the lender relinquishes their interest in the appraisal. Because of the Equal Credit Opportunity Act, any consumer demanding a copy of the appraisal report must be given one by their lending company.

Myth: Consumers need not care about what is in their appraisal document so long as it satisfies the needs of their lending institution.

Fact: It is a very good idea for consumers to go through a copy of their appraisal report so that they can double-check the accuracy of the report, in case it's required to question its veracity. 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, filled with useful and often-revealing information - 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: There is no reason to hire an appraiser unless you are trying to get an assessment of the value of a property during a sales transaction involving a lending institution.

Fact: Hiring an appraiser can fulfill a variety of needs depending on the designations and certifications of the appraiser involved; appraisers can perform a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.

Myth: There's no reason to get an appraisal if you order a home inspection.

Fact: A home inspection serves a completely different purpose than an appraisal. The task of the appraiser is to come to an opinion of value in the appraisal process and through producing the report. House inspectors will produce a report that will express the condition of the property and its major components and possible damage.