Appraisal myths debunked

It is mandated by law that an appraiser needs to be state-licensed to create appraisal reports for federally-supported home purchases in California. Also by law, you have the ability to receive a copy of the finished report from your lending agency. Contact our professional staff if you have any questions about the appraisal process.

Myth: Assessed value generally will equate to market value.

Fact: It is probable that California, like most states, validates the idea that the assessed value equals the market value; however, this is not often the case. Examples include when interior remodeling has happened and the assessor has not seen the improvements, or when properties in the vicinity have not been reassessed for an prolonged period.

Myth: The appraised value of a home will differ depending upon if the appraisal is produced for the buyer or the seller.

Fact: The opinion of value of the home does not affect the payment of the appraiser; as such, the appraiser has no preconceived interest in the cost of the home. This means that he will render business with impartiality and independence regardless for whom the appraisal is created.

Myth: Market value will approximate replacement cost.

Fact: Without any pressure from any outside parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific house. If the home were rebuilt, the dollar amount needed to do so would be the replacement cost.

Myth: There are specific ways that appraisers use to determine the value of a property, such as the price per square foot.

Fact: There are many numerous methods that an appraiser will use to make a comprehensive analysis of every factor pertaining to the property, such as the size, location, condition, how close it is to specific facilities and the opinion of value of recently sold comparable houses.

Myth: As homes appreciate by a certain percentage - in a robust economic state - the properties around the appreciating properties are expected to increase by the same amount.

Fact: Worth appreciation of a certain house must be determined on a case-by-case basis, factoring in data on comparable houses and other relevant elements. It doesn't matter if the economy is on the rise or declining.

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Myth: The property's outside is determinate of the actual worth of the property; there is no need to do an interior inspection.

Fact: To determine an accurate worth beyond all doubt, an appraiser must inspect the home on a variety of factors based on area, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from just viewing the property from the exterior.

Myth: Because consumers pay for appraisals when applying for loans to buy or refinance real estate, they legally own their appraisal.

Fact: Unless a lending agency releases its interest in the report, it is legally owned by the lending agency that ordered the appraisal. Consumers must be given a version of the document upon written request because of the Equal Credit Opportunity Act.

Myth: It doesn't matter to consumers what's in the appraisal report so long as it meets the needs of their lender.

Fact: Only if home buyers look at a copy of their report can they verify 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 appraisal report makes an excellent record for future reference, filled with useful 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 area.

Myth: Appraisals are ordered only to assess building values in property sales involving mortgage-lending transactions.

Fact: Appraisers can have many varied qualifications and designations which allow them to perform a multitude of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.

Myth: There's no need to get an appraisal if you order a home inspection.

Fact: A home inspection report serves a completely different purpose than an appraisal report. An appraiser finds an opinion of value in the appraisal process and resulting document. House inspectors will produce a report that will determine the condition of the home and its major components and possible damage.