Appraisal myths debunked
It is mandated by the government that an appraiser must be state-licensed to produce appraisals for federally-related real estate sales in California. The law entitles you to get a copy of your completed appraisal report from your lending agency after it has been produced. Contact our professional staff if you have any questions about the appraisal process.
Myth: The value that is ascertained by the appraiser is required to be exactly the same as the market value.
Fact: It is possible that California, like most states, supports the suggestion that the assessed value equals the market value; however, this is not always true. Examples include when interior remodeling has happened and the assessor does not know about the improvements, or when houses in the area have not been reassessed for an prolonged period of time.
Myth: The buyer or the seller will have impact in the value of the home depending upon for whom the appraiser is working.
Fact: There is no vested interest on the part of the appraiser in the outcome of the appraisal, therefore he will complete his work with impartiality and independence, despite for whom the appraisal is written.
Myth: Any time market value is found, it should be similar to the replacement cost of the home.
Fact: The way market value is arrived at is based on what a buyer would likely pay a willing seller for a house without being under duress from any outside party to purchase or sell. If the home were rebuilt, the dollar amount required to do so would make up the replacement cost.
Myth: Appraisers use a calculation, like a certain price per square foot, to conclude the worth of a house.
Fact: There are many differing ways that an appraiser will use to make a full analysis of every factor pertaining to the property, such as the size, location, condition, how close it is to specific facilities and the sales price of recently sold comparable homes.
Myth: When the economy is robust and the cost of houses are found to be appreciating by a certain percentage, the other houses in the area can be expected to rise based on that same percentage.
Fact: Any worth at which an appraiser concludes concerning a particular property is always personalized, based on certain factors found from the information of comparable homes and other considerations within the house itself. This is true in excellent economic times as well as poor.
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Myth: Just looking at what the house looks like on the outside gives an idea of its value.
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 just looking at the home from the outside.
Myth: Because consumers pay for appraisal reports when applying for loans to purchase or refinance their home, they own their appraisal.
Fact: Unless a lender releases its interest in the document, it is legally owned by the lending agency that purchased the appraisal. Consumers have to be provided with a copy of the report upon written request as per the Equal Credit Opportunity Act.
Myth: There's no point for consumers to even care about what the report contains so long as their lending institution is fine with the contents therein.
Fact: It is a very good idea for home buyers to read a copy of their appraisal so that they can verify the accuracy of the report, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes an invaluable record for future reference, comprised of helpful and often-revealing data - 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: There is no reason to hire an appraiser unless you are trying to get an assessment of the cost of a home during a sales transaction involving a lender.
Fact: Depending upon their qualifications and designations, appraisers can and do perform a multitude of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: There's no need to get an appraisal if you get a home inspection.
Fact: A home inspection has a completely different purpose than an appraisal report. The purpose of the appraiser is to find an opinion of value in the appraisal process and through producing the report. House inspectors will write a report that will explain the condition of the home and its major components and possible damage.