Common myths about appraising
By law, an appraiser is enforced to be state-licensed to produce appraisals for federally-related purchases. The law entitles you to get a copy of your completed report from your lender after it has been provided. Contact our professional staff if you have any questions about the appraisal procedure.
Myth: The value that is assessed by the appraiser is required to be exactly the same as the market value.
Fact: While most states back the concept that assessed value equates estimated market value, this usually is not the case. Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby homes are excellent examples of why there might be a differential in price.
Myth: Depending on whether the appraisal is ordered for the buyer or the seller, the value of the property will vary.
Fact: The appraised value of the house does not affect the salary of the appraiser; due to this, the appraiser has no personal interest in the opinion of value of the property. Obviously, he will render business with impartiality and independence regardless for whom the appraisal is created.
Myth: Market value will approximate replacement cost.
Fact: The way market value is derived is based on what a buyer would likely pay a willing seller for a property without being under pressure from any outside group to buy or sell. The replacement cost is the dollar amount needed to rebuild a property in-kind.
Myth: Appraisers use a calculation, like a certain price per square foot, to come to the value of a property.
Fact: There are many numerous formulae that an appraiser will use to make a detailed analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to specific facilities and the cost of recently sold comparable houses.
Myth: In a strong economy - when the values of properties in a given area are reported to be increasing by a particular percentage - the values of individual houses in the proximity can be expected to rise by that same percentage.
Fact: All appreciation of price is on a case-by-case basis, found by data on relevant elements and the data of comparable houses. This is true in excellent economic times as well as poor.
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Myth: Just looking at what the home looks like on the outside gives an excellent idea of its cost.
Fact: To find an accurate price beyond all doubt, an appraiser must assess the home on a variety of factors based on location, condition, improvements, amenities, and current market trends. Obviously, none of these things can be found simply by examining the home from the exterior.
Myth: Since you're the one funding for the appraisal when applying for your loan to purchase or refinance your home, you own the ordered appraisal report.
Fact: The report is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the document. Due the Equal Credit Opportunity Act, any home buyer requesting a copy of the report must be given one by their lending company.
Myth: It doesn't matter to consumers what's in the appraisal so long as it meets the requirements of their lending agency.
Fact: A consumer should definitely read through their report; there might be some questions or some concerns with the accuracy of the appraisal that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of data contained in an appraisal that should 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 region.
Myth: Appraisers are hired only to estimate home values in home sales involving mortgage-lending deals.
Fact: Appraisers can have many different qualifications and designations which allow them to perform a series 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 get a home inspection.
Fact: An appraisal report does not serve the same purpose as an inspection. The task of the appraiser is to form an opinion of value in the appraisal process and through writing the report. House inspectors will create a report that will express the condition of the property and its major components and possible damage.