Appraisal myths debunked

It is enforced by legal agencies that an appraiser needs to be state-licensed to offer appraisal reports for federally-supported home sales in California. You also have the right to acquire a copy of the finished appraisal from your lending agency. Contact our professional staff if you have any questions about the appraisal procedure.

Myth: Market value will be equivocal to the assessed value of the property.

Fact: While most states back the concept that assessed value is the same as estimated market value, this usually is not the case. Often when interior remodeling has been done and the assessor is not aware of the improvement or properties in the Escondido have not been reassessed for quite a while, it may vary wildly.

Myth: The buyer or the seller sometimes may have some pull in the cost of the property depending upon for whom the appraiser is working.

Fact: The price of the home does not affect the salary of the appraiser; because of this, the appraiser has no pressured interest in the cost of the property. What this means is he will complete his services with impartiality and independence regardless for whom the appraisal is conducted.

Myth: Any time market value is established, it should be the same as the replacement cost of the property.

Fact: Market value is acquired by what a willing buyer would be interested in paying a willing seller for a certain property, with neither being under pressure to buy or sell. Replacement value is the dollar amount needed to rebuild a property in-kind.

Myth: Specific formulae, such as the price per square foot of the property, are the methods appraisers use to arrive at the price of a property.

Fact: There are many varied calculations that an appraiser will use to make an in-depth investigation of every factor in consideration of the property, such as the size, location, condition, how close it is to undesirable facilities and the sales price of recently sold comparable homes.

Myth: In a robust economy - when the prices of homes in a given neighborhood are found to be increasing by a particular percentage - the values of individual houses in the proximity can be expected to increase by that same percentage.

Fact: Value increase of a specific house is always determined on a case-by-case basis, factoring in information on comparable properties and other relevant elements. It doesn't matter if the economy is doing well or declining.

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Myth: You can generally see what a home is worth simply by looking at the exterior.

Fact: There are a number of different variables that show the value of a house; these factors include area, condition, improvements, amenities, and market trends. There's no real way to get all of this data from simply inspecting the property from the exterior.

Myth: Because the consumer is the party who provides the money to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report is theirs.

Fact: Legally, the appraisal is owned by the lending company unless the lender relinquishes their interest in the document. Consumers have to be given a version of the document upon written request as per the Equal Credit Opportunity Act.

Myth: There's no reason for consumers to even concern themselves with what the appraisal report contains so long as their lending institution is satisfied.

Fact: A consumer should definitely inspect their report; there could be some questions or some concerns with the accuracy of the appraisal report that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of data stored in an appraisal report that can 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: The only reason someone would order an appraisal is if a home needs its cost estimated in a lender-based sales transaction.

Fact: Based upon their qualifications and designations, appraisers can and often do provide a multitude of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.

Myth: A home inspection serves the same purpose as an appraisal.

Fact: A home inspection has a completely different purpose than an appraisal report. The job of the appraiser is to come to an opinion of value in the appraisal process and through creating the report. A home inspector assesses the condition of the house and its main components and reports these findings.