Common myths about appraising
By law, an appraiser is enforced to be state-licensed to produce appraisals for federally-supported purchases. The law gives you the right to receive a copy of your finished appraisal report from your lender after it has been provided. Contact us if you have any questions about the appraisal process.
Myth: Assessed value should always be the same as to market value.
Fact: While most states back the suggestion that assessed value is equal to estimated market value, this generally is not the case. Examples include when interior reconstruction has occurred and the assessor is unaware of the improvements, or when houses in the vicinity have not been reassessed for an extended period of time.
Myth: The buyer or the seller may have some pull in the value of the property depending upon for whom the appraiser is working.
Fact: The cost of the home does not affect the pay of the appraiser; as a result, the appraiser has no pressured interest in the worth of the property. Obviously, he will render job with impartiality and independence regardless for whom the appraisal is produced.
Myth: Any time market value is found, it should be similar to the replacement cost of the home.
Fact: Market value is arrived at through what a willing buyer would be interested in paying a willing seller for a particular property, with neither being under pressure to buy or sell. If the home were reconstructed, the dollar amount required to do so would be the replacement cost.
Myth: Specific formulae, such as the price per square foot, are the methods appraisers use to determine the value of a house.
Fact: There are many different processes that an appraiser will use to make a full analysis of every factor pertaining to the house, such as the size, location, condition, how close it is to specific facilities and the opinion of value of recently sold comparable homes.
Myth: When the economy is robust and the worth of homes are found to be increasing by a certain percentage, the other homes in the proximity can be expected to appreciate based on that same percentage.
Fact: Price increase of a certain home is always determined on a case-by-case basis, factoring in information on comparable properties and other relevant considerations. This is true in strong economic times as well as poor.
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Myth: The house's outside is determinate of the actual worth of the property; there is no need to do an interior inspection.
Fact: There are a number of different variables that show property value; these factors include location, condition, improvements, amenities, and market trends. As you can see, none of these factors can be derived simply by inspecting the home from the exterior.
Myth: Because consumers pay for the appraisal when applying for loans to purchase or refinance their property, they own their appraisal report.
Fact: Legally, the appraisal is owned by the lender unless the lender releases their interest in the document. However, consumers have to be provided with a copy of the report upon written request, due to the Equal Credit Opportunity Act.
Myth: Consumers need not be concerned with what is in their document so long as it satisfies the necessities of their lending institution.
Fact: A consumer should definitely read through their document; there may be some questions or some worries about the accuracy of the analysis that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal 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: Appraisals are ordered only to estimate building values in property sales involving mortgage-lending deals.
Fact: Appraisers can have many different qualifications and designations which allow them to provide a variety of different services including - but not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: A home inspection serves the same purpose as an appraisal.
Fact: A home inspection report has a completely different purpose than an appraisal. The purpose of the appraiser is to form an opinion of value in the appraisal process and through producing the report. The job of a home inspector is to assess the condition of the property and its major components, then create a report on their conclusions.