Common myths about appraising
It is mandated by law that a real estate appraiser must be state-licensed to create appraisal reports for federally-supported property transactions in California. The law gives you the right to acquire a copy of your finished appraisal report from your lender after it has been produced. Contact The Appraisal Firm if you have any questions about the appraisal procedure.
Myth: Market value should be the same as the assessed value of the property.
Fact: While most states back the concept that assessed value is equal to estimated market value, this generally is not the case. Usually when interior remodeling has occurred and the assessor is unaware of the improvement or other homes in the area have not been reassessed for a good length of time, it may vary wildly.
Myth: Depending on if the appraisal is provided for the buyer or the seller, the opinion of value of the property will vary.
Fact: The value of the house does not affect the payment of the appraiser; due to this, the appraiser has no vested interest in the value of the property. Obviously, he will provide task with impartiality and independence regardless for whom the appraisal is produced.
Myth: Market value will equate to replacement cost.
Fact: Market value is derived from what a willing buyer would be interested in paying a willing seller for a particular home, with neither being under undue influence to buy or sell. The replacement cost is the dollar amount needed to rebuild a property in-kind.
Myth: There are certain methods that real estate appraisers use to find the value of a property, such as the price per square foot.
Fact: There are many varied processes that an appraiser will use to make a comprehensive investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to certain facilities and the cost of recently sold comparable houses.
Myth: When the economy is on the rise and the sales prices of houses are found to be rising by a certain percentage, the other properties in the neighborhood can be expected to rise based on that same percentage.
Fact: Any worth at which an appraiser concludes concerning a certain home is always individualized, based on certain factors concluded from the information of comparable houses and other considerations within the property itself. It doesn't matter if the economy is doing well or declining.
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Myth: You can usually see what a property is worth simply by looking at the exterior.
Fact: To find an accurate price beyond all doubt, an appraiser must examine the house on a variety of factors based on location, condition, improvements, amenities, and current market trends. An exterior inspection obviously can't provide all of the information required.
Myth: Because consumers fund the appraisal when applying for loans to buy or refinance real estate, they own their appraisal.
Fact: Legally, the appraisal report is owned by the lender unless the lender releases their interest in the report. Because of the Equal Credit Opportunity Act, any consumer demanding a copy of the appraisal report must be provided with one by their lending company.
Myth: Home buyers need not be concerned with what is in their appraisal so long as it satisfies the requirements of their lending agency.
Fact: A consumer should definitely inspect their document; there may be some questions or some concerns 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 proximity.
Myth: The only reason someone would order an appraisal is if a property needs its value assessed in a lender-based sales transaction.
Fact: Ordering an appraisal can fulfill a variety of wants depending on the designations and certifications of the appraiser involved; appraisers can provide a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: You don't need to get an appraisal if you get a home inspection.
Fact: An appraisal does not fulfill the same purpose as an inspection. The reason behind an appraisal is to arrive at an opinion of fair market value during the appraisal process and the completion of the report. A home inspector assesses the condition of the home and its major components and reports their findings.