Appraisal myths debunked
Legally, a real estate appraiser needs to be state certified to perform substantiated appraisal reports for federally-related transactions. The law gives you the right to get a copy of your completed appraisal from your lender after it has been produced. Contact Appraisal Professionals if you have any concerns about the appraisal process.
Myth: The value that is ascertained by the appraiser must be the same as the market value.
Fact: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always. Examples include when interior remodeling has happened and the assessor has not seen the improvements, or when properties in the area have not been reassessed for an prolonged time.
Myth: The buyer or the seller often will have an influence in the cost of the house depending upon for whom the appraiser is working.
Fact: The appraiser has no personal interest in the result of the appraisal report and should render his job with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: Any time market value is established, it should be similar to the replacement cost of the home.
Fact: The way market value is derived is based on what a home buyer would be willing to pay a willing seller for a house without being under influence from any external party to purchase or sell. The dollar amount necessary to reconstruct a house is what forms the replacement cost.
Myth: Certain formulae, like the price per square foot of the property, are the ways appraisers use to come to the price of a home.
Fact: An appraisal is a collection of information based on the property's size, location, proximity to specific facilities, the condition of the property and the price of recent comparable sales. You can count on Appraisal Professionals's staff to be honest in assessing this data.
Myth: When the economy is robust and the value of properties are reported to be appreciating by a certain percentage, the other properties in the proximity can be expected to rise based on that same percentage.
Fact: Any cost at which an appraiser arrives concerning a certain house is always individualized, based on certain factors found from the information of comparable homes and other considerations within the property itself. It doesn't matter if the economy is on the rise or declining.
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Myth: Just seeing what the house looks like on its exterior gives an excellent idea of its worth.
Fact: To find an accurate worth beyond all doubt, an appraiser must assess the property on a variety of factors based on area, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from just looking at the property from the exterior.
Myth: Since you're the one providing the money for the appraisal when applying for your loan to buy or refinance your house, you own the produced appraisal.
Fact: Unless a lender releases its interest in the appraisal report, it is legally owned by the lending company that ordered the appraisal. Consumers must be provided with a version of the appraisal report through request as per the Equal Credit Opportunity Act.
Myth: There's no reason for consumers to even concern themselves with what the report contains so long as their lending institution is satisfied.
Fact: Only if consumers check out a copy of their appraisal 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. There is an incredible amount of data stored in an 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 proximity.
Myth: Appraisers are hired only to estimate building values in home sales involving mortgage-lending transactions.
Fact: Based upon their qualifications and designations, appraisers can and may perform a series of different 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: Appraisal reports are nothing like a home inspection report. The purpose of the appraiser is to form an opinion of value in the appraisal process and through producing the report. The point of a home inspector is to determine the condition of the house and its major components, then provide a report on their conclusions.