Appraisal myths debunked
It is mandated by the government that a real estate appraiser needs to be state-licensed to write appraisals for federally-related home sales in California. Also by law, you are allowed to receive a copy of the completed appraisal from your lending agency. Contact our professional staff if you have any questions about the appraisal process.
Myth: The value that is ascertained by the appraiser should be exactly the same as the market value.
Fact: It is possible that California, like most states, validates the common myth that the assessed value is no different from the market value; however, this is not often the case. Interior remodeling that the assessor is unaware of and a dearth of reassessment on nearby houses are perfect examples of why this occurs.
Myth: The appraised value of a house will be different depending upon if the appraisal is provided for the buyer or the seller.
Fact: The price of the home does not affect the pay of the appraiser; as such, the appraiser has no personal interest in the cost of the home. This means that he will complete his services with impartiality and objectivity regardless for whom the appraisal is created.
Myth: Any time market value is established, it should be similar to the replacement cost of the house.
Fact: The way market value is found is based on what a home buyer would be willing to pay a willing seller for a home without being under duress from any outside group to buy or sell. If the house were rebuilt, the dollar amount required to do so would make up the replacement cost.
Myth: Appraisers use a formula, such as a certain price per square foot, to come to the cost of a property.
Fact: Appraisers make a full analysis of all factors pertaining to the price of a home, including its location, condition, size, proximity to facilities and recent values of comparable properties.
Myth: In a strong economy - when the worth of houses in a given neighborhood are found to be rising by a certain percentage - the costs of individual homes in the vicinity can be expected to rise by that same percentage.
Fact: Any cost at which an appraiser concludes in regards to a certain property is always personalized, based on certain factors found from the information of comparable properties and other specifications within the house itself. It doesn't matter if the economy is on the rise or declining.
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Myth: You can often see what a home is worth simply by looking at the exterior.
Fact: There are a multitude of different factors that conclude property value; these factors include area, condition, improvements, amenities, and market trends. As you can see, none of these variables can be found just by inspecting the property from the outside.
Myth: Because consumers fund appraisal reports when applying for loans to buy or refinance real estate, they own their appraisal.
Fact: Unless a lending agency releases its vestment in the appraisal report, it is legally owned by the lending company that purchased the appraisal. By the Equal Credit Opportunity Act, any consumer demanding a copy of the appraisal report must be provided with one by their lender.
Myth: There's no need for home buyers to even concern themselves with what the appraisal report contains so long as their lending company is fine with the contents therein.
Fact: A home buyer should definitely look through their report; there may be some questions or some worries about the accuracy of the analysis that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of information stored in an appraisal that can be useful to the consumer 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 area.
Myth: There is no reason to hire an appraiser unless you are trying to get an estimate of the cost of a house during a sales transaction involving a lending agency.
Fact: Hiring an appraiser can fulfill a variety of requirements depending on the designations and certifications of the appraiser involved; appraisers can provide a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: A home inspection serves the same purpose as an appraisal.
Fact: A home inspection report has a completely different purpose than an appraisal report. The appraiser concludes on an opinion of value in the appraisal process and resulting document. House inspectors will create a report that will show the condition of the property and its major components and possible damage.