Common myths about appraising
It is mandated by law that an appraiser must be state-licensed to produce appraisals for federally-supported property transactions in California. Also by law, you are allowed to demand a copy of the finished report from your lender. Contact our professional staff if you have any questions about the appraisal procedure.
Myth: The value that is assessed by the appraiser must be equivalent to the market value.
Fact: It might be that California, like most states, validates the common myth that the assessed value equals the market value; however, this is not often the case. Examples include when interior remodeling has occurred and the assessor is unaware of the improvements, or when houses in the vicinity have not been reassessed for an extended period.
Myth: The buyer or the seller sometimes may have impact in the cost 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 report, therefore he will complete his work with impartiality and independence, no matter for whom the appraisal is written.
Myth: Any time market value is found, it should equal the replacement cost of the house.
Fact: The way market value is derived is based on what a home buyer would be willing to pay a willing seller for a house without being under influence from any outside group to buy or sell. The dollar amount required to reconstruct a home is what forms the replacement cost.
Myth: There are certain methods that appraisers use to find the cost of a property, like the price per square foot.
Fact: There are many varied processes that an appraiser will use to make an in-depth analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to certain facilities and the sales price of recently sold comparable houses.
Myth: As properties appreciate by a certain percentage - in a strong economic state - the properties around the appreciating properties are expected to increase by the same amount.
Fact: All increase of value is on a case-by-case basis, determined by data on relevant conditions and the data of comparable properties. This is true in strong economic times as well as bad.
Have other questions about appraisers, appraising or real estate in Orange County or Seal Beach, CA?Contact our professional staff
Myth: Just looking at what the property looks like on the outside gives a good idea of its value.
Fact: To find an accurate price beyond all doubt, an appraiser must assess the house on a variety of factors based on area, condition, improvements, amenities, and current market trends. An outside-only inspection certainly can't provide all of the information required.
Myth: Because the consumer is the one 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: Unless a lending agency releases its interest in the report, it is legally owned by the lending company that purchased the appraisal. By the Equal Credit Opportunity Act, any home buyer demanding a copy of the report must be provided with it by their lending company.
Myth: Consumers need not worry about what is in their appraisal document so long as it meets the requirements of their lending company.
Fact: It is very important for home buyers to peruse a copy of their report so that they can verify the accuracy of the document, in case they need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can double as a record for the future, containing a great deal of information - including, but certainly not limited to 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 property sales involving mortgage-lending deals.
Fact: Depending upon their qualifications and designations, appraisers can and often do perform a multitude of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: You shouldn't need to get an appraisal if you get a home inspection.
Fact: A home inspection report serves a completely different purpose than an appraisal report. 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 write a report that will express the condition of the home and its major components and possible damage.
Got a Question?
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.