Common myths about appraising
It is mandated by legal agencies that a real estate appraiser needs to be state-licensed to offer appraisals for federally-supported real estate purchases in California. The law gives you the right to receive a copy of your finished appraisal from your lending agency after it has been provided. Contact Associate Appraisers of America if you have any questions about the appraisal procedure.
Myth: Market value must be equivocal to the assessed value of the property.
Fact: It is probable that California, like most states, validates the idea that the assessed value is the same as the market value; however, this is sometimes the exception rather than the rule. Interior remodeling that the assessor is not aware of and a dearth of reassessment on nearby properties are excellent examples of why there might be a differential in price.
Myth: The buyer or the seller may have an influence in the value of the property depending upon for whom the appraiser is working.
Fact: The appraiser has no vested interest in the outcome of the report and should render his job with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Any time market value is found, it should be the same as the replacement cost of the property.
Fact: The way market value is derived is based on what a home buyer would likely pay a willing seller for a property without being under influence from any outside party to buy or sell. The dollar amount demanded to rebuild a home is what forms the replacement cost.
Myth: There are specific ways that real estate appraisers use to determine the value of a house, like the price per square foot.
Fact: Appraisers make a comprehensive analysis of all factors in consideration to the price of a home, including its location, condition, size, proximity to facilities and recent opinion of value of comparable homes.
Myth: As homes increase their worth by a specific percentage - in a strong economy - the houses around the appreciating properties are expected to appreciate by the same amount.
Fact: All increase of worth is on a one-on-one basis, determined by information on relevant considerations and the data of comparable homes. It makes no difference if the economy is strong or poor.
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Myth: The house's outside is determinate of the actual price of the house; it is unnecessary to do an interior appraisal.
Fact: There are a number of different variables that conclude property value; these factors include area, condition, improvements, amenities, and market trends. Obviously, none of these variables can be found simply by looking at the property from the outside.
Myth: Since you're the one coughing up the cash for the appraisal report when applying for the loan to purchase or refinance your house, you own the produced appraisal.
Fact: Unless a lender releases its interest in the appraisal report, it is legally owned by the lending company that ordered the appraisal. By the Equal Credit Opportunity Act, any home buyer asking for a copy of the report must be provided with one by their lending agency.
Myth: It doesn't mean anything to consumers what's in the report so long as it meets the requirements of their lender.
Fact: Only if consumers look at a copy of their report can they double-check its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes an excellent record for future reference, filled with helpful and often-revealing data - including 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: Appraisers are hired only to estimate house values in house sales involving mortgage-lending deals.
Fact: Based upon their qualifications and designations, appraisers can and may perform a multitude of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: There's no reason to get an appraisal if you get a home inspection.
Fact: Appraisal reports are completely different than a home inspection. The task of the appraiser is to come to an opinion of value in the appraisal process and through writing the report. The purpose of a home inspector is to determine the condition of the house and its main components, then produce a report on these findings.
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