Common myths about appraising
Legally, an appraiser needs to be state certified to perform legitimate appraisal reports for federally-supported purchase. The law allows you to get a copy of your finished report from your lender after it has been produced. Contact The Appraisal Firm if you have any concerns about the appraisal process.
Myth: Market value has to be the same as the assessed value of the property.
Fact: It is possible that California, like most states, validates the common myth that the assessed value is the same as the market value; however, this is not always true. Examples include when interior reconstruction has occurred and the assessor does not know about the improvements, or when homes in the vicinity have not been reassessed for an prolonged period.
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 property does not affect the salary of the appraiser; due to this, the appraiser has no preconceived interest in the value of the property. This means that he will render business with impartiality and independence regardless for whom the appraisal is created.
Myth: Any time market value is found, it should equal the replacement cost of the home.
Fact: Market value is derived from what a willing buyer would be interested in paying a willing seller for a particular house, with neither being under pressure to buy or sell. Replacement value is the dollar amount required to reconstruct a home in-kind.
Myth: Appraisers use a formula, such as a certain price per square foot, to figure out the cost of a house.
Fact: There are many different methods that an appraiser will use to make a full investigation of every factor in consideration of the house, such as the size, location, condition, how close it is to certain facilities and the cost of recently sold comparable homes.
Myth: As houses appreciate by a specific percentage - in a robust economic state - the houses in proximity are figured to appreciate by the same amount.
Fact: All increase of price is on a one-on-one basis, found by information on relevant considerations and the data of comparable houses. This is true in good economic times as well as bad.
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Myth: Just looking at what the house looks like on the outside gives an idea of its worth.
Fact: Home value is concluded by a multitude of factors, including location, condition, improvements, amenities, and market trends. As you can see, none of these things can be derived simply by looking at the home from the exterior.
Myth: Since the consumer is the person who provides the funding 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 document is, in fact, legally owned by the lending agency - unless the lender "relinquishes its interest" in the report. However, home buyers have to be given a copy of the document upon written request, due to the Equal Credit Opportunity Act.
Myth: There's no reason for consumers to even worry about what the appraisal report contains so long as their lending company is satisfied.
Fact: A consumer should definitely read through their document; there will probably 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. An appraisal can double as a record for the future, containing an exorbitant amount of information - including, but certainly 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 proximity.
Myth: Appraisers are hired only to estimate house values in house sales involving mortgage-lending transactions.
Fact: Hiring an appraiser can fulfill a variety of needs 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: Appraisal reports have almost nothing in common with a home inspection. An appraiser decides upon an opinion of value in the appraisal process and resulting report. House inspectors will create a report that will explain the condition of the house and its major components and possible damage.