Common myths about appraising
It is mandated by the government that an appraiser needs to be state-licensed to perform appraisal reports for federally-supported property purchases in Kentucky. You also have the right to demand a copy of the completed report from your lending agency. Contact us if you have any concerns about the appraisal process.
Myth: The value that is assessed by the appraiser must be equivalent to the market value.
Fact: It is probable that Kentucky, like most states, validates the idea that the assessed value equals the market value; however, this is sometimes the exception rather than the rule. There are times when interior remodeling has been done and the assessor is not aware of the improvement or properties in the area have not been reassessed for quite a while, it may vary wildly.
Myth: Depending on if the appraisal is done for the buyer or the seller, the cost of the property will vary.
Fact: There is no vested interest on the part of the appraiser in the outcome of the report, therefore he will complete his work with impartiality and independence, regardless for whom the appraisal is created.
Myth: Market value should equate to replacement cost.
Fact: Market value is derived from what a willing buyer would be interested in paying a willing seller for a specific house, with neither being under pressure to buy or sell. If the property were rebuilt, the dollar amount necessary to do so would make up the replacement cost.
Myth: Appraisers use a calculation, like a specific price per square foot, to arrive at the value of a house.
Fact: Appraisers complete a detailed analysis of all factors in consideration to the price of a house, including its location, condition, size, proximity to facilities and recent opinion of value of comparable properties.
Myth: When the economy is on the rise and the cost of properties are found to be appreciating by a certain percentage, the other properties in the vicinity can be expected to appreciate based on that same percentage.
Fact: All appreciation of value is on a one-on-one basis, found by data on relevant considerations and the data of comparable houses. This is true in fair economic times as well as bad.
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Myth: The house's exterior is determinate of the actual worth of the property; it is unnecessary to do an interior appraisal.
Fact: Home worth is concluded by a multitude of variables, including location, condition, improvements, amenities, and market trends. As you can see, none of these factors can be derived simply by inspecting the property from the outside.
Myth: Because consumers fund the appraisal when applying for loans to purchase or refinance their home, they own their appraisal report.
Fact: Legally, the report is owned by the lender unless the lender relinquishes their interest in the document. Home buyers have to be supplied with a copy of the appraisal report through request as per the Equal Credit Opportunity Act.
Myth: Home buyers need not care about what is in their appraisal so long as it satisfies the needs of their lending agency.
Fact: A home buyer should definitely look through their appraisal; there could be some questions or some concerns about the accuracy of the appraisal that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can serve as a record for the future, since it contains an exorbitant amount of 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 vicinity.
Myth: Appraisals are ordered only to estimate home values in house sales involving mortgage-lending deals.
Fact: Hiring an appraiser can fulfill a variety of requirements 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 no different than a home inspection.
Fact: A home inspection report serves a completely different purpose than an appraisal report. The appraiser forms an opinion of value in the appraisal process and resulting appraisal. The task of a home inspector is to approximate the condition of the home and its major components, then write a report on their inspection.