Common myths about appraising
By law, an appraiser must be state-licensed to produce appraisals for federally-backed purchases. Also by law, you have the right to demand a copy of the finished appraisal report from your lender. Contact our professional staff if you have any concerns about the appraisal procedure.
Myth: Assessed value should always be similar to to market value.
Fact: While most states support the suggestion that assessed value is equal to estimated market value, this often is not the case. Interior reconstruction that the assessor has not investigated and a lack of reassessment on nearby houses are perfect examples of why there might be a differential in price.
Myth: The buyer or the seller sometimes may have leverage in the value of the home depending upon for whom the appraiser is working.
Fact: The cost of the house does not affect the pay of the appraiser; because of this, the appraiser has no personal interest in the worth of the house. This means that he will provide task with impartiality and independence regardless for whom the appraisal is conducted.
Myth: Market value should equate to replacement cost.
Fact: Market value is found by what a willing buyer would likely pay a willing seller for a particular house, with neither being under duress to buy or sell. If the home were reconstructed, the dollar amount required to do so would form the replacement cost.
Myth: Certain methods, such as the price per square foot, are the ways appraisers use to arrive at the worth of a house.
Fact: There are many numerous formulae that an appraiser will use to make a full investigation of every factor in consideration of the property, such as the size, location, condition, how close it is to certain facilities and the cost of recently sold comparable properties.
Myth: As homes appreciate by a specific percentage - in a strong economic state - the homes nearby are expected to increase by the same amount.
Fact: Worth appreciation of a specific house has to 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 powerful or terrible.
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Myth: The property's exterior is determinate of the actual value of the house; it is unnecessary to do an interior appraisal.
Fact: Property worth is concluded by a multitude of factors, including location, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from simply examining the home from the exterior.
Myth: Since the consumer is the person who provides the capital to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.
Fact: The appraisal report is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the document. Because of the Equal Credit Opportunity Act, any consumer asking for a copy of the document must be provided with it by their lending company.
Myth: Home buyers need not be concerned with what is in their report so long as it exceeds the requirements of their lending group.
Fact: A home buyer should definitely read through their appraisal; there could be some questions or some concerns 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. Also, the report makes an invaluable record for future reference, comprised of helpful 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 vicinity.
Myth: The only reason someone would hire an appraiser is if a home needs its cost assessed in a lender sales transaction.
Fact: Ordering an appraisal 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: A house inspection serves the same purpose as an appraisal.
Fact: A home inspection serves a completely different purpose than an appraisal report. The function of an appraisal is to form an opinion of fair market value during the appraisal process and the production of the report. House inspectors will create a report that will determine the condition of the home and its major components and possible damage.
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