Common myths about appraising
Legally, a real estate appraiser must be state certified to produce legitimate real estate appraisals for federally-supported purchase. Also by law, you have the right to receive a copy of the completed appraisal from your lender. Contact us if you have any concerns about the appraisal procedure.
Myth: The value that is assessed by the appraiser should be equivalent to the market value.
Fact: This usually isn't true; most states do support the idea that the assessed value is the same as market value, but not always. Examples include when interior remodeling has occurred and the assessor does not know about the improvements, or when homes in the area have not been reassessed for an prolonged period of time.
Myth: The buyer or the seller will have an influence in the value of the home depending upon for whom the appraiser is working.
Fact: There is no real interest on the part of the appraiser in the result of the appraisal report, therefore he will complete his work with impartiality and independence, no matter for whom the appraisal is conducted.
Myth: The replacement cost of the home should be is on par with the market value.
Fact: Market value is based on what a willing buyer would be interested in paying a willing seller for a specific property, with neither being under pressure to buy or sell. If the home were rebuilt, the dollar amount necessary to do so would form the replacement cost.
Myth: Appraisers use a formula, such as a certain price per square foot, to figure out the worth of a property.
Fact: There are many different methods that an appraiser will use to make an in-depth analysis of every factor in consideration of the home, such as the size, location, condition, how close it is to specific facilities and the worth of recently sold comparable homes.
Myth: In a strong economy - when the prices of homes in a given neighborhood are found to be rising by a certain percentage - the worth of individual properties in the area can be expected to rise by that same percentage.
Fact: All appreciation of price is on an individual basis, determined by data on relevant elements and the data of comparable houses. It doesn't matter if the economy is doing well or declining.
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Myth: The home's exterior is determinate of the actual price of the property; it is unnecessary to do an interior appraisal.
Fact: Home value is concluded by a number of variables, including location, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from simply viewing the home from the outside.
Myth: Because the consumer is the person who puts up the funding to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal belongs to them.
Fact: Legally, the document is owned by the lender unless the lender relinquishes their interest in the appraisal. Home buyers have to be supplied with a version of the appraisal report through request due to the Equal Credit Opportunity Act.
Myth: There's no point for consumers to even worry about what the appraisal report contains so long as their lending agency is satisfied.
Fact: A consumer should definitely read through their appraisal report; there could be some questions or some concerns with the accuracy of the report that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes a near perfect record for future reference, comprised of useful and often-revealing data - 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 area.
Myth: There is no reason to hire an appraiser unless you are trying to get an estimate of the price of a house during a sales transaction involving a lender.
Fact: Based upon their qualifications and designations, appraisers can and do perform a multitude of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: There's no reason to get an appraisal if you have had a home inspection.
Fact: A home inspection report has a completely different purpose than an appraisal. The purpose of the appraiser is to conclude an opinion of value in the appraisal process and through writing the report. A home inspector analyzes the condition of the house and its major components and reports these findings.