Myth: Market value should be the same as the assessed value of the property.
Reality: While most states uphold the idea that assessed value approximates estimated market value, this generally is not the case. Interior reconstruction that the assessor is not aware of and a dearth of reassessment on nearby homes are prime examples of why the price can vary.
Myth: The buyer or the seller can have an influence in the cost of the house depending upon for whom the appraiser is working.
Reality: The opinion of value of the property does not affect the pay of the appraiser; as a result, the appraiser has no personal interest in the value of the house. Obviously, he will render job with impartiality and independence regardless of for whom the appraisal is conducted.
Myth: Market value should equal replacement cost.
Reality: Without any pressure from any outside parties to buy or sell, market value is what a willing buyer would pay a willing seller for a specific home. Replacement value is the dollar amount required to rebuild a house in-kind.
Myth: Appraisers use a formula, like a certain price per square foot, to come to the value of a house.
Reality: There are many differing methods that an appraiser will use to make a full investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to undesirable facilities and the values of recently sold comparable properties.
Myth: In a powerful economy - when the prices of homes in a given region are found to be appreciating by a certain percentage - the prices of individual homes in the area can be expected to appreciate by that same percentage.
Reality: The appreciation of a certain property is always concluded on an individualized basis, factoring in information on comparable houses and other relevant elements. It doesn't matter if the economy is on the rise or declining.
Myth: You can generally find what a home is worth simply by looking at the exterior.
Reality: To conclude a definite value beyond all doubt, an appraiser must examine the house on a variety of factors based on area, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from simply looking at the property from the outside.
Myth: Since you're the one funding for the appraisal report when applying for your loan to buy or refinance your home, you own the provided appraisal.
Reality: The document is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the document. Due the Equal Credit Opportunity Act, any consumer requesting a copy of the report must be given one by their lending agency.
Myth: Home buyers need not care about what is in their appraisal so long as it satisfies the requirements of their lending agency.
Reality: Only when consumers look at a copy of their appraisal report can they ensure its accuracy and know if they should ask questions. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes an invaluable record for future reference, comprised of 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: The only reason someone would hire an appraiser is if a property needs its value estimated in a lender sales transaction.
Reality: Ordering an appraisal can fulfill a variety of needs depending on the designations and certifications of the appraiser involved; appraisers can provide a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: You shouldn't need to get an appraisal if you order a home inspection.
Reality: A home inspection report serves a completely different purpose than an appraisal. An appraiser concludes on an opinion of value in the appraisal process and resulting appraisal. The task of a home inspector is to assess the condition of the house and its major components, then create a report on their inspection.
