Appraisal myths debunked
Legally, an appraiser needs to be state certified to produce legitimate real estate appraisals for federally-related sales. The law entitles you to receive a copy of your completed appraisal from your lending agency after it has been provided. Contact our professional staff if you have any questions about the appraisal process.
Myth: Assessed value should always be the same as to market value.
Fact: It might be that California, like most states, validates the idea that the assessed value is no different from the market value; however, this certainly varies based on state-to-state. Interior reconstruction that the assessor has not investigated and a dearth of reassessment on nearby homes are prime examples of why the price can vary.
Myth: The opinion of value of a home will differ depending upon if the appraisal is provided for the buyer or the seller.
Fact: The appraiser has no vested interest in the outcome of the appraisal report and should conduct services with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: Market value should equate to replacement cost.
Fact: The way market value is derived is based on what a buyer would likely pay a willing seller for a property without being under duress from any outside party to buy or sell. The replacement cost is the dollar amount required to rebuild a property in-kind.
Myth: Certain formulae, like the price per square foot of the property, are what appraisers use to arrive at the cost of a property.
Fact: There are many numerous calculations that an appraiser will use to make a comprehensive investigation of every factor pertaining to the house, such as the size, location, condition, how close it is to undesirable facilities and the opinion of value of recently sold comparable homes.
Myth: When the economy is strong and the sales prices of houses are reported to be rising by a certain percentage, the other houses in the area can be expected to increase based on that same percentage.
Fact: All appreciation of worth is on a case-by-case basis, concluded by information on relevant considerations and the data of comparable houses. It doesn't matter if the economy is doing well or declining.
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Myth: The house's exterior is determinate of the actual price of the house; it is unnecessary to do an interior appraisal.
Fact: To determine an accurate value beyond all doubt, an appraiser must examine the home on a variety of factors based on area, condition, improvements, amenities, and market trends. As you can see, none of these factors can be found simply by examining the property from the outside.
Myth: Since you're the one providing the money for the appraisal when applying for your loan to purchase or refinance real estate, you own the produced appraisal report.
Fact: The appraisal is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the document. Home buyers have to be provided with a copy of the document upon written request as per the Equal Credit Opportunity Act.
Myth: Home buyers need not be concerned with what is in their document so long as it exceeds the needs of their lending company.
Fact: A home buyer should definitely read through their report; there might be some questions or some concerns with the accuracy of the inspection that must 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 a great deal of information - 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 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 lender.
Fact: Ordering an appraisal 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: You don't need to get an appraisal if you order a home inspection.
Fact: An appraisal report does not fulfill the same purpose as an inspection. An appraiser decides upon an opinion of value in the appraisal process and resulting appraisal report. The point of a home inspector is to find the condition of the house and its major components, then write a report on these conclusions.