Appraisal myths & facts
Legally, an appraiser has to be state certified to produce legitimate real estate appraisals for federally-backed transactions. You also have the right to receive a copy of the finished report from your lender. Contact us if you have any questions about the appraisal process.
Myth: The value that is ascertained by the appraiser will be the same as the market value.
Fact: While most states support the concept that assessed value is the same as estimated market value, this usually is not the case. Interior reconstruction that the assessor is unaware of and a dearth of reassessment on nearby homes are excellent examples of why the price can vary.
Myth: The buyer or the seller often will have an influence 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 outcome of the appraisal, therefore he will complete his work with impartiality and independence, no matter for whom the appraisal is conducted.
Myth: Market value should be the same as replacement cost.
Fact: The way market value is found is based on what a home buyer would likely pay a willing seller for a property without being under pressure from any outside group to purchase or sell. The dollar amount required to rebuild a home is what forms the replacement cost.
Myth: There are specific methods that real estate appraisers use to determine the value of a home, such as the price per square foot.
Fact: There are many different calculations that an appraiser will use to make a detailed analysis of every factor pertaining to the house, such as the size, location, condition, how close it is to undesirable facilities and the value of recently sold comparable houses.
Myth: When the economy is robust and the value of homes are reported to be rising by a certain percentage, the other properties in the area can be expected to appreciate based on that same percentage.
Fact: Any cost at which an appraiser arrives concerning a particular property is always personalized, based on certain factors pulled from the information of comparable properties and other considerations within the property itself. This is true in strong economic times as well as bad.
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Myth: The house's exterior is determinate of the actual worth of the home; it is unnecessary to do an interior appraisal.
Fact: House value 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 inspecting the property from the exterior.
Myth: Since you're the one paying for the appraisal report when applying for the loan to buy or refinance real estate, you own the produced appraisal report.
Fact: The report is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the document. Because of the Equal Credit Opportunity Act, any home buyer asking for a copy of the report must be given one by their lender.
Myth: Home buyers need not be concerned with what is in their appraisal document so long as it satisfies the necessities of their lending group.
Fact: It is very important for consumers to peruse a copy of their appraisal report so that they can verify the accuracy of the report, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes a near perfect record for future reference, containing useful and often-revealing information - including, but 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 area.
Myth: The only reason someone would order an appraisal is if a property needs its value assessed in a lender-based sales transaction.
Fact: Hiring an appraiser can fulfill a variety of requirements 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 need to get an appraisal if you have had a home inspection.
Fact: An appraisal report does not serve the same purpose as an inspection report. The purpose of an appraisal is to arrive at an opinion of fair market value during the appraisal process and the completion of the appraisal. The purpose of a home inspector is to find the condition of the house and its main components, then compose a report on their findings.
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