Appraisal myths & facts
It is enforced by legal agencies that a real estate appraiser is required to be state-licensed to write appraisal reports for federally-related home purchases in California. Also by law, you have the ability to request a copy of the finished appraisal from your lender. Contact our professional staff if you have any questions about the appraisal process.
Myth: Market value needs to be similar to the assessed value of the property.
Fact: While most states uphold the suggestion that assessed value approximates estimated market value, this generally is not the case. Interior remodeling that the assessor has not investigated and a dearth of reassessment on nearby houses are perfect examples of why there might be a differential in price.
Myth: The opinion of value of a home will differ depending upon if the appraisal is conducted for the buyer or the seller.
Fact: The appraised value of the home does not affect the salary of the appraiser; as a result, the appraiser has no preconceived interest in the value of the house. This means that he will conduct job with impartiality and independence regardless for whom the appraisal is created.
Myth: Market value should be the same as replacement cost.
Fact: The way market value is arrived at is based on what a buyer would be willing to pay a willing seller for a house without being under duress from any outside party to buy or sell. The replacement cost is the dollar amount needed to rebuild a house in-kind.
Myth: There are specific ways that appraisers use to determine the cost of a property, like the price per square foot.
Fact: Appraisers complete an exhaustive analysis of all factors pertaining to the worth of a house, including its location, condition, size, proximity to facilities and recent costs of comparable houses.
Myth: In a robust economy - when the costs of properties in a given area are found to be appreciating by a certain percentage - the costs of individual homes in the vicinity can be expected to rise by that same percentage.
Fact: All appreciation of value is on a case-by-case basis, concluded by information on relevant elements and the data of comparable houses. This is true in good economic times as well as bad.
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Myth: You can usually see what a home is worth simply by looking at the outside.
Fact: There are a number of different factors that determine the value of a home; these factors include area, condition, improvements, amenities, and market trends. Obviously, none of these things can be found just by inspecting the property from the outside.
Myth: Since you're the one funding for the appraisal when applying for your loan to purchase or refinance real estate, you own the produced appraisal.
Fact: Legally, the appraisal is owned by the lending company unless the lender relinquishes their interest in the appraisal. Under the Equal Credit Opportunity Act, any home buyer demanding a copy of the report must be given it by their lending company.
Myth: It doesn't mean anything to consumers what's in the appraisal report so long as it meets the needs of their lender.
Fact: A consumer should definitely read through their document; there might be some questions or some worries with the accuracy of the report that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of information contained in an appraisal that will probably 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: The only reason someone would hire an appraiser is if a property needs its worth assessed in a lender-based sales transaction.
Fact: Appraisers can have many varied qualifications and designations which allow them to provide a multitude of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: An appraisal is the same as a home inspection report.
Fact: Appraisal reports are completely different than a home inspection. The purpose of the appraiser is to find an opinion of value in the appraisal process and through writing the report. A home inspector determines the condition of the home and its major components and reports these findings.
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