Appraisal myths debunked

Legally, a real estate appraiser needs to be state certified to write legitimate real estate appraisals for federally-related transactions. Also by law, you have the ability to request a copy of the finished appraisal report from your lending agency. Contact Appraisal Professionals if you have any concerns about the appraisal procedure.

Myth: The value that is assessed by the appraiser will be equivalent to the market value.

Fact: While most states uphold the concept that assessed value is equal to estimated market value, this generally is not the case. There are times when interior remodeling has occurred and the assessor is unaware of the improvement or other houses in the area have not been reassessed for years or more, it may vary wildly.

Myth: Depending on if the appraisal is drawn up for the buyer or the seller, the appraised value of the home will vary.

Fact: The appraiser has no vested interest in the result of the appraisal and should render services with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.

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

Fact: Without any pressure from any different parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a particular home. If the property were rebuilt, the dollar amount needed to do so would make up the replacement cost.

Myth: Appraisers use a formula, such as a certain price per square foot, to arrive at the value of a home.

Fact: Appraisers make a comprehensive analysis of all factors pertaining to the worth of a home, including its location, condition, size, proximity to facilities and recent values of comparable houses.

Myth: In a robust economy - when the worth of properties in a given county are reported to be rising by a particular percentage - the values of individual houses in the proximity can be expected to rise by that same percentage.

Fact: Price appreciation of a specific home must be determined on an individualized basis, factoring in information on comparable properties and other relevant considerations. It makes no difference whether the economy is good or on the decline.

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Myth: You can generally find what a property is worth simply by looking at the outside.

Fact: Property value is determined by a number of variables, including - but not limited to - area, condition, improvements, amenities, and market trends. An exterior inspection certainly can't provide all of the data necessary.

Myth: Since you're the one funding for the appraisal when applying for your loan to buy or refinance real estate, you own the ordered appraisal report.

Fact: The report is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the report. Under the Equal Credit Opportunity Act, any home buyer demanding a copy of the report must be given one by their lending company.

Myth: There's no reason for home buyers to even worry about what the report contains so long as their lending institution is fine with the contents therein.

Fact: A home buyer should definitely read through their appraisal; there might 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. Also, the report makes a near perfect record for future reference, comprised of helpful and often-revealing data - including 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 vicinity.

Myth: There is no reason to order an appraisal unless you are trying to get an assessment of the worth of a property during a sales transaction involving a lending agency.

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

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

Fact: An appraisal report does not fulfill the same purpose as an inspection report. The job of the appraiser is to conclude an opinion of value in the appraisal process and through creating the report. House inspectors will produce a report that will express the condition of the home and its major components and possible damage.