Appraisal myths debunked
By law, an appraiser is enforced to be state-licensed to offer appraisals for federally-backed transactions. Also by law, you are entitled to demand a copy of the completed appraisal from your lender. Contact Associate Appraisers of America if you have any concerns about the appraisal procedure.
Myth: Assessed value generally will equate to market value.
Fact: This usually isn't true; most states do support the idea that the assessed value is the same as market value, but not always. Examples include when interior remodeling has happened and the assessor does not know about the improvements, or when houses in the vicinity have not been reassessed for an extended time.
Myth: Depending on if the appraisal is ordered for the buyer or the seller, the appraised value of the property will vary.
Fact: The appraised value of the house does not affect the payment of the appraiser; as such, the appraiser has no personal interest in the value of the property. This means that he will conduct services with impartiality and independence regardless for whom the appraisal is created.
Myth: Market value will be the same as replacement cost.
Fact: The way market value is arrived at is based on what a buyer would likely pay a willing seller for a property without being under duress from any external group to buy or sell. If the house were rebuilt, the dollar amount needed to do so would set the replacement cost.
Myth: Appraisers use a formula, such as a specific price per square foot, to conclude the value of a house.
Fact: Appraisers complete a detailed analysis of all factors in consideration to the value of a property, including its location, condition, size, proximity to facilities and recent costs of comparable houses.
Myth: When the economy is on the rise and the cost of homes are found to be rising by a certain percentage, the other homes in the area can be expected to appreciate based on that same percentage.
Fact: Cost appreciation of a certain home must be determined on a case-by-case basis, factoring in information on comparable homes and other relevant specifications within the home itself. It makes no difference whether the economy is robust or terrible.
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Myth: The house's outside is determinate of the actual value of the house; there is no need to do an interior appraisal.
Fact: To find an accurate price beyond all doubt, an appraiser must assess the home on a variety of factors based on area, condition, improvements, amenities, and market trends. An outside-only inspection certainly can't provide all of the information necessary.
Myth: Because consumers pay for the appraisal when applying for loans to buy or refinance their house, they legally own their appraisal.
Fact: The appraisal is, in fact, legally owned by the lender - unless the lender "releases its interest" in the appraisal. However, consumers have to be supplied with a copy of the appraisal report upon written request, due to the Equal Credit Opportunity Act.
Myth: Home buyers need not be concerned with what is in their appraisal so long as it exceeds the necessities of their lending institution.
Fact: A consumer should definitely read through their appraisal; there may be some questions or some worries with the accuracy of the appraisal 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 data stored in an report that could 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 area.
Myth: The only reason someone would hire an appraiser is if a home needs its worth estimated in a lender-based sales transaction.
Fact: Depending upon their qualifications and designations, appraisers can and do provide a variety of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: You don't need to get an appraisal if you have had a home inspection.
Fact: Appraisal reports are definitely not the same as a home inspection report. The appraiser decides upon an opinion of value in the appraisal process and resulting appraisal. The point of a home inspector is to determine the condition of the property and its major components, then produce a report on their conclusions.
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