Common myths about appraising

Legally, an appraiser is required to be state certified to write substantiated real estate appraisals for federally-backed purchase. Also by law, you have the ability to demand a copy of the completed appraisal report from your lender. Contact our professional staff if you have any concerns about the appraisal process.

Myth: Assessed value will always equate to market value.

Fact: While most states support the idea that assessed value approximates estimated market value, this commonly is not the case. Interior reconstruction that the assessor is not aware of and a dearth of reassessment on nearby homes are prime examples of why the price can vary.

Myth: The value of a property will vary depending upon if the appraisal is conducted for the buyer or the seller.

Fact: The price of the home does not affect the payment of the appraiser; due to this, the appraiser has no pressured interest in the cost of the house. This means that he will render business with impartiality and independence regardless for whom the appraisal is provided.

Myth: The replacement cost of the home should be is on par with the market value.

Fact: Without any suggestion from any outside parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific house. Replacement value is the dollar amount necessary to rebuild a home in-kind.

Myth: Appraisers use a formula, like a certain price per square foot, to arrive at the value of a property.

Fact: Appraisers make a comprehensive analysis of all factors in consideration to the price of a property, including its location, condition, size, proximity to facilities and recent values of comparable houses.

Myth: In a strong economy - when the sales prices of homes in a given area are reported to be appreciating by a certain percentage - the worth of individual properties in the vicinity can be expected to increase by that same percentage.

Fact: Any cost at which an appraiser concludes in regards to a certain property is always personalized, based on certain factors concluded from the information of comparable homes and other considerations within the home itself. This is true in good economic times as well as poor.

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Myth: Just looking at what the house looks like on the outside gives a good idea of its value.

Fact: There are a multitude of different variables that show property value; these factors include area, condition, improvements, amenities, and market trends. An external inspection obviously can't provide all of the information required.

Myth: Considering that the consumer is the party who provides the funding to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal is theirs.

Fact: Legally, the document is owned by the lending company unless the lender releases their interest in the document. Home buyers have to be supplied with a version of the document through request due to the Equal Credit Opportunity Act.

Myth: There's no point for home buyers to even concern themselves with what the report contains so long as their lender is fine with the contents therein.

Fact: Only if consumers look over 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. An appraisal can serve as a record for the future, containing an exorbitant amount of data - 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 building values in property sales involving mortgage-lending deals.

Fact: Ordering an appraisal can fulfill a variety of requirements depending on the designations and certifications of the appraiser involved; appraisers can perform a great deal of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.

Myth: An appraisal report is no different than a home inspection.

Fact: An appraisal does not fulfill the same purpose as an inspection. An appraiser concludes on an opinion of value in the appraisal process and resulting appraisal. The task of a home inspector is to assess the condition of the property and its major components, then compose a report on their findings.