Appraisal myths debunked

By law, an appraiser is enforced to be state-licensed to perform appraisals for federally-backed sales. The law entitles you to receive a copy of your finished report from your lending agency after it has been provided. Contact us if you have any questions about the appraisal process.

Myth: Assessed value should always be the same as to market value.

Fact: While most states back the idea that assessed value approximates estimated market value, this generally is not the case. Interior remodeling that the assessor is not aware of and a dearth of reassessment on nearby homes are excellent examples of why there might be a differential in price.

Myth: Depending on whether the appraisal is provided for the buyer or the seller, the appraised value of the house will vary.

Fact: The price of the home does not affect the salary of the appraiser; as a result, the appraiser has no personal interest in the value of the property. Obviously, he will provide job with impartiality and objectivity regardless for whom the appraisal is created.

Myth: Any time market value is found, it should be the same as the replacement cost of the property.

Fact: Without any influence from any outside parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a particular house. Replacement value is the dollar amount necessary to reconstruct a property in-kind.

Myth: Certain methods, like the price per square foot, are what appraisers use to come to the value of a property.

Fact: There are many varied calculations that an appraiser will use to make an in-depth investigation of every factor in consideration of the home, such as the size, location, condition, how close it is to certain facilities and the cost of recently sold comparable homes.

Myth: In a strong economy - when the prices of properties in a given region are reported to be increasing by a particular percentage - the worth of individual houses in the area can be expected to appreciate by that same percentage.

Fact: Price appreciation of a certain property must be determined on a case-by-case basis, factoring in information on comparable properties and other relevant elements. This is true in fair economic times as well as poor.

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Myth: The property's outside is determinate of the actual worth of the house; there is no need to do an interior appraisal.

Fact: There are a multitude of different variables that show the value of a home; these factors include location, condition, improvements, amenities, and market trends. Obviously, none of these factors can be derived just by viewing the home from the exterior.

Myth: Because consumers pay for appraisals when applying for loans to buy or refinance their house, they own their appraisal.

Fact: The appraisal is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the document. However, consumers must be supplied with a copy of the report upon written request, through the Equal Credit Opportunity Act.

Myth: There's no reason for home buyers to even concern themselves with what the appraisal contains so long as their lending company is fine with the contents therein.

Fact: A consumer should definitely read through their appraisal report; there may be some questions or some concerns about the accuracy of the report that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of information contained in an appraisal report that will probably be useful to the consumer in the future, such as 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 region.

Myth: There is no reason to hire an appraiser unless you are trying to get an estimate of the worth of a home during a sales transaction involving a lending institution.

Fact: Based upon their qualifications and designations, appraisers can and may perform a multitude of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.

Myth: A home inspection serves the same purpose as an appraisal.

Fact: Appraisal reports are nothing like a home inspection. The point of an appraisal report is to conclude upon an opinion of fair market value during the appraisal process and the production of the appraisal report. The job of a home inspector is to determine the condition of the home and its main components, then provide a report on their findings.