Common myths about appraising

By law, an appraiser must be state-licensed to perform appraisals for federally-backed purchases. You have the ability to receive a copy of the completed appraisal report from your lender. Contact us if you have any questions about the appraisal procedure.

Myth: The value that is ascertained by the appraiser is required to be the same as the market value.

Fact: This is not often the case; most states do support the suggestion that the assessed value is the same as market value, but not always. Interior reconstruction that the assessor has not investigated and a lack of reassessment on nearby houses are excellent examples of why this occurs.

Myth: The opinion of value of a property will vary depending upon whether the appraisal is ordered for the buyer or the seller.

Fact: The price of the house does not affect the salary of the appraiser; due to this, the appraiser has no preconceived interest in the opinion of value of the property. This means that he will render business with impartiality and independence regardless for whom the appraisal is produced.

Myth: Market value will equal replacement cost.

Fact: The way market value is derived is based on what a home buyer would be willing to pay a willing seller for a house without being under duress from any external group to purchase or sell. The dollar amount demanded to reconstruct a house is what constitutes the replacement cost.

Myth: Certain formulae, like the price per square foot of the property, are the ways appraisers use to arrive at the worth of a property.

Fact: There are many varied processes that an appraiser will use to make a detailed analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to undesirable facilities and the value of recently sold comparable homes.

Myth: In a powerful economy - when the sales prices of homes in a given region are found to be rising by a particular percentage - the prices of individual houses in the area can be expected to appreciate by that same percentage.

Fact: Worth appreciation of a specific home has to be determined on a case-by-case basis, factoring in information on comparable properties and other relevant considerations. It doesn't matter if the economy is on the rise or declining.

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Myth: You can generally see what a home is worth simply by looking at the exterior.

Fact: To find an accurate price beyond all doubt, an appraiser must examine the home on a variety of factors based on area, condition, improvements, amenities, and market trends. Obviously, none of these factors can be found just by inspecting the property from the exterior.

Myth: Since the consumer is the one who puts up the capital to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal belongs to them.

Fact: The appraisal report is, in fact, legally owned by the lender - unless the lender "releases its interest" in the appraisal. However, consumers have to be provided with a copy of the appraisal upon written request, because of the Equal Credit Opportunity Act.

Myth: It doesn't matter to consumers what's in the report so long as it meets the necessities of their lending company.

Fact: It is very important for consumers to read a copy of their appraisal report so that they can verify the accuracy of the report, in case there is a need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of data contained in an appraisal 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 area.

Myth: The only reason someone would hire an appraiser is if a home needs its price estimated in a lender-based sales transaction.

Fact: Hiring an appraiser 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: An appraisal report is the same as a home inspection.

Fact: Appraisal reports are definitely not the same as a home inspection report. The point of an appraisal is to conclude upon an opinion of fair market value during the appraisal process and the completion of the appraisal. House inspectors will write a report that will explain the condition of the property and its major components and possible damage.