Appraisal myths debunked
By law, an appraiser is enforced to be state-licensed to offer appraisals for federally-supported purchases. The law allows you to acquire a copy of your completed report from your lending agency after it has been provided. Contact us if you have any questions about the appraisal process.
Myth: Assessed value generally will be similar to to market value.
Fact: It is probable that California, like most states, validates the suggestion that the assessed value is the same as the market value; however, this certainly varies based on state-to-state. Examples include when interior remodeling has happened and the assessor has not seen the improvements, or when houses in the vicinity have not been reassessed for an extended period.
Myth: The buyer or the seller can have some pull in the cost of the home depending upon for whom the appraiser is working.
Fact: The cost of the home does not affect the pay of the appraiser; as such, the appraiser has no pressured interest in the cost of the home. This means that he will render services with impartiality and objectivity regardless for whom the appraisal is created.
Myth: Any time market value is established, it should be the same as the replacement cost of the house.
Fact: The way market value is arrived at is based on what a buyer would be willing to pay a willing seller for a property without being under pressure from any external group to purchase or sell. The dollar amount required to reconstruct a property is what constitutes the replacement cost.
Myth: Certain methods, such as the price per square foot of the property, are the methods appraisers use to come to the value of a property.
Fact: There are many numerous ways that an appraiser will use to make an in-depth analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to certain facilities and the sales price of recently sold comparable properties.
Myth: When the economy is robust and the worth of homes are reported to be appreciating by a certain percentage, the other properties in the neighborhood can be expected to rise based on that same percentage.
Fact: All increase of worth is on a case-by-case basis, found by data on relevant elements and the data of comparable houses. This is true in strong economic times as well as bad.
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Myth: You can commonly see what a house is worth simply by looking at the exterior.
Fact: To conclude an accurate price beyond all doubt, an appraiser must inspect the house on a variety of factors based on location, condition, improvements, amenities, and current market trends. An exterior inspection certainly can't provide all of the information needed.
Myth: Since the consumer is the one who puts up the funding to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal is theirs.
Fact: The document is, in fact, legally owned by the lending company - unless the lender "relinquishes its interest" in the report. However, consumers have to be given a copy of the report upon written request, under the Equal Credit Opportunity Act.
Myth: Home buyers need not be concerned with what is in their report so long as it satisfies the necessities of their lending institution.
Fact: Only if consumers check out a copy of their appraisal can they verify its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of data stored in an appraisal that should be useful to the home buyer 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 area.
Myth: Appraisals are ordered only to estimate house values in home sales involving mortgage-lending transactions.
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: A house inspection serves the same purpose as an appraisal.
Fact: An appraisal report does not fulfill the same purpose as an inspection. The point of an appraisal report is to form an opinion of fair market value during the appraisal process and the completion of the appraisal report. The point of a home inspector is to assess the condition of the property and its major components, then provide a report on these inspection.
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