Common myths about appraising
By law, an appraiser is required to be state-licensed to perform appraisals for federally-related transactions. You also have the right to demand a copy of the completed appraisal report from your lending agency. Contact Appraisal Professionals if you have any concerns about the appraisal procedure.
Myth: Assessed value should always be the same as to market value.
Fact: This is not often the case; most states do support the concept that the assessed value is the same as market value, but not always. Interior remodeling that the assessor has not investigated and a lack of reassessment on nearby properties are perfect examples of why there might be a differential in price.
Myth: Depending on whether the appraisal is drawn up for the buyer or the seller, the cost of the home will vary.
Fact: The price of the property does not affect the salary of the appraiser; as a result, the appraiser has no personal interest in the opinion of value of the property. This means that he will render job with impartiality and objectivity regardless for whom the appraisal is conducted.
Myth: Market value will equate to replacement cost.
Fact: Market value is found by what a willing buyer would be interested in paying a willing seller for a specific house, with neither being under pressure to buy or sell. Replacement cost is the dollar amount required to reconstruct a home in-kind.
Myth: Specific formulae, such as the price per square foot, are the ways appraisers use to come to the cost of a home.
Fact: Appraisers make a comprehensive analysis of all factors in consideration to the value of a home, including its location, condition, size, proximity to facilities and recent worth of comparable homes.
Myth: In a powerful economy - when the prices of houses in a given region are found to be rising by a particular percentage - the values of individual houses in the area can be expected to increase by that same percentage.
Fact: Price appreciation of a certain property has to be concluded on a case-by-case basis, factoring in data on comparable properties and other relevant elements. This is true in good economic times as well as bad.
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Myth: Just looking at what the home looks like on its exterior gives a good idea of its value.
Fact: To determine an accurate value beyond all doubt, an appraiser must assess the house on a variety of factors based on location, condition, improvements, amenities, and market trends. There's no real way to get all of this information from simply looking at the property from the exterior.
Myth: Because the consumer is the one who puts up the capital to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal belongs to them.
Fact: Unless a lender releases its interest in the report, it is legally owned by the lending company that purchased the appraisal. Consumers have to be provided with a copy of the appraisal report through request as per the Equal Credit Opportunity Act.
Myth: It doesn't concern consumers what's in the appraisal report so long as it satisfies the necessities of their lending agency.
Fact: A home buyer should definitely inspect their report; there might be some questions or some worries with the accuracy of the appraisal that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can serve as a record for the future, containing an incredible amount of information - including, but certainly 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 proximity.
Myth: The only reason someone would hire an appraiser is if a house needs its cost assessed in a lender sales transaction.
Fact: Hiring an appraiser can fulfill a variety of needs depending on the designations and certifications of the appraiser involved; appraisers can perform a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: An appraisal report is the same as a home inspection report.
Fact: An appraisal does not fulfill the same purpose as an inspection report. The task of the appraiser is to come to an opinion of value in the appraisal process and through producing the report. House inspectors will compose a report that will show the condition of the property and its major components and possible damage.