Appraisal myths debunked
It is required by law that an appraiser needs to be state-licensed to write appraisals for federally-supported real estate sales in California. Also by law, you are entitled to demand a copy of the finished appraisal report from your lender. Contact The Appraisal Firm if you have any questions about the appraisal procedure.
Myth: Market value must be the same as the assessed value of the property.
Fact: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always. Often when interior remodeling has been done and the assessor is has not investigated the improvement or other homes in the area have not been reassessed for quite a while, it may vary wildly.
Myth: Depending on if the appraisal is produced for the buyer or the seller, the opinion of value of the home will vary.
Fact: The appraiser has no personal interest in the result of the report and should conduct services with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Market value will approximate replacement cost.
Fact: Market value is arrived at through what a willing buyer would likely pay a willing seller for a certain house, with neither being under undue influence to buy or sell. Replacement value is the dollar amount required to rebuild a house in-kind.
Myth: Appraisers use a calculation, such as a certain price per square foot, to come to the value of a house.
Fact: Appraisers make a comprehensive analysis of all factors pertaining to the value of a house, including its location, condition, size, proximity to facilities and recent opinion of value of comparable homes.
Myth: When the economy is strong and the sales prices of properties are found to be rising by a certain percentage, the other houses in the neighborhood can be expected to appreciate based on that same percentage.
Fact: All increase of price is on a one-on-one basis, found by information on relevant conditions and the data of comparable properties. This is true in excellent economic times as well as poor.
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Myth: You can generally find what a property is worth simply by looking at the exterior.
Fact: Home worth is concluded by a number of variables, including - but not limited to - area, condition, improvements, amenities, and market trends. An exterior inspection definitely can't provide all of the information necessary.
Myth: Since you're the one funding for the appraisal when applying for the loan to purchase or refinance real estate, you own the produced appraisal report.
Fact: Legally, the appraisal is owned by the lender unless the lender relinquishes their interest in the appraisal. However, consumers have to be given a copy of the document upon written request, through the Equal Credit Opportunity Act.
Myth: There's no need for consumers to even care about what the appraisal contains so long as their lender is fine with the contents therein.
Fact: A consumer should definitely look through their document; there may be some questions or some worries about the accuracy of the appraisal that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes an invaluable record for future reference, containing 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: There is no reason to order an appraisal unless you are trying to get an assessment of the cost of a property during a sales transaction involving a lending agency.
Fact: Depending upon their qualifications and designations, appraisers can and may provide a variety of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A property inspection serves the same purpose as an appraisal.
Fact: Appraisal reports are definitely not the same as 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.