Appraisal Myths
Home Appraisals, Inc. discusses appraisal myths and realities about real estate appraisals and appraisers
Myth: The assessed value determined by the city is the same as the market value.
Reality: This usually isn’t true; most states do support the suggestion that the assessed value is the same as market value, but not always. Examples include when interior reconstruction has occurred and the assessor does not know about the improvements, or when properties in the vicinity have not been reassessed for an prolonged time.
Myth: The opinion of value of a home will vary depending upon if the appraisal is conducted for the buyer or the seller.
Reality: The appraiser has no personal interest in the result of the appraisal report and should conduct his job with independence, objectivity and impartiality – no matter for whom the appraisal is conducted.
Myth: Any time market value is calculated, it should equal the replacement cost of the house.
Reality: Without any pressure from any different parties to buy or sell, market value is what a willing buyer would pay a willing seller for a particular house. Replacement cost is the dollar amount necessary to reconstruct a house in-kind.
Myth: Appraisers use a formula, such as a specific price per square foot, to come to the value of a home.
Reality: There are many differing calculations that an appraiser will use to make a comprehensive investigation of every factor in consideration of the home, such as the size, location, condition, how close it is to specific facilities and the values of recently sold comparable homes.
Myth: As houses increase in value by a specific percentage – in a strong economic state – the homes nearby are figured to increase by the same amount.
Reality: All increase of value is on a case-by-case basis, concluded by information on relevant elements and the data of comparable homes. This is true in robust economic times as well as bad.
Myth: You can generally tell what a home is worth simply by looking at the exterior.
Reality: To find a solid value beyond all doubt, an appraiser must inspect the property on a variety of factors based on location, condition, improvements, amenities, and market trends. As you can see, none of these factors can be found just by inspecting the house from the outside.
Myth: Since you’re the one funding for the appraisal report when applying for your loan to purchase or refinance your home, you own the ordered appraisal report.
Reality: Unless a lending agency releases its vestment in the document, it is legally owned by the lending company that ordered the appraisal. Consumers have to be supplied with a version of the report upon written request because of the Equal Credit Opportunity Act.
Myth: There’s no reason for home buyers to even care about what the report contains so long as their lending company is fine with the contents therein.
Reality: Only when consumers look over a copy of their appraisal can they ensure its accuracy and know if they should ask questions. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes an invaluable record for future reference, filled with useful and often-revealing data – including 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: The only reason someone would order an appraisal is if a property needs its value assessed in a lender-based sales transaction.
Reality: 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: An appraisal is no different than a home inspection report.
Reality: A home inspection report serves a completely different purpose than an appraisal report. The point of an appraisal is to form an opinion of market value during the appraisal process and the production of the appraisal report. House inspectors will write a report that will explain the condition of the home and its major components and possible damage.
