Myth: Market value must be similar to the assessed value of the property.
Reality: While most states back the suggestion that assessed value is equal to estimated market value, this often is not the case.
Interior remodeling that the assessor has not investigated and a lack of reassessment on nearby houses are prime examples of why there might be a differential in price.
Myth: The buyer or the seller sometimes may have an influence in the cost of the house depending upon for whom the appraiser is working.
Reality: There is no vested interest on the part of the appraiser in the outcome of the appraisal report, therefore he will conduct his work with impartiality and independence, regardless of for whom the appraisal is conducted.
Myth: The replacement cost of the property should be on par with the market value.
Reality: The way market value is arrived at is based on what a buyer would likely pay a willing seller for a property without being under influence from any outside group to buy or sell.
The dollar amount needed to reconstruct a property is what constitutes the replacement cost.
Myth: Specific methods, like the price per square foot, are the methods appraisers use to determine the value of a property.
Reality: There are many different methods that an appraiser will use to make an in-depth analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to undesirable facilities and the values of recently sold comparable homes.
Myth: When the economy is on the rise and the sales prices of properties are found to be increasing by a certain percentage, the other houses in the proximity can be expected to rise based on that same percentage.
Reality: Any value an appraiser derives concerning a certain house is always personalized, based on certain factors found from the information of comparable houses and other considerations within the home itself.
It doesn't matter if the economy is doing well or declining.
Myth: Just looking at what the property looks like on its exterior gives an idea of its value.
Reality: To find an accurate value beyond all doubt, an appraiser must examine the house on a variety of factors based on location, condition, improvements, amenities, and market trends.
As you can see, none of these things can be derived just by viewing the property from the outside.
Myth: Considering that the consumer is the party who provides the money to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal report is theirs.
Reality: Legally, the document is owned by the lending agency unless the lender relinquishes their interest in the appraisal.
However, home buyers have to be given a copy of the report upon written request, through the Equal Credit Opportunity Act.
Myth: There's no reason for consumers to even care about what the report contains so long as their lending institution is fine with the contents therein.
Reality: A consumer should definitely inspect their document; there will probably be some questions or some concerns about the accuracy of the appraisal that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make.
An appraisal report can double as a record for the future, as it contains a great deal of information - including, but certainly 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: There is no reason to order an appraisal unless you are trying to get an assessment of the value of a home during a sales transaction involving a lending company.
Reality: Based upon their qualifications and designations, appraisers can and will provide a lot of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: There's no need to get an appraisal if you order a home inspection.
Reality: A home inspection serves a completely different purpose than an appraisal report.
The purpose of the appraiser is to form an opinion of value in the appraisal process and through producing the report.
House inspectors will write a report that will express the condition of the house and its major components and possible damage.
