Appraisal myths debunked
It is enforced by law that a real estate appraiser is required to be state-licensed to create appraisal reports for federally-supported real estate purchases in Arizona. The law gives you the right to acquire a copy of your finished appraisal report from your lending agency after it has been produced. Contact our professional staff if you have any questions about the appraisal procedure.
Myth: The value that is assessed by the appraiser should be equivalent to the market value.
Fact: While most states back the concept that assessed value approximates estimated market value, this often is not the case. There are times when interior remodeling has been done and the assessor is not aware of the improvement or other houses in the neighborhood have not been reassessed for years or more, it may vary wildly.
Myth: Depending on if the appraisal is ordered for the buyer or the seller, the appraised value of the house will vary.
Fact: The value of the house does not affect the payment of the appraiser; as a result, the appraiser has no pressured interest in the value of the home. This means that he will complete his services with impartiality and independence regardless for whom the appraisal is produced.
Myth: Any time market value is found, it should be the same as the replacement cost of the house.
Fact: The way market value is found is based on what a buyer would likely pay a willing seller for a house without being under influence from any external group to buy or sell. If the home were reconstructed, the dollar amount necessary to do so would be the replacement cost.
Myth: Appraisers use a calculation, like a specific price per square foot, to arrive at the worth of a home.
Fact: There are many differing ways that an appraiser will use to make a detailed investigation of every factor in consideration of the home, such as the size, location, condition, how close it is to certain facilities and the value of recently sold comparable properties.
Myth: When the economy is robust and the cost of homes are found to be increasing by a certain percentage, the other homes in the area can be expected to appreciate based on that same percentage.
Fact: Price appreciation of a specific home must be concluded on a case-by-case basis, factoring in data on comparable properties and other relevant specifications within the house itself. This is true in good economic times as well as bad.
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Myth: The house's exterior is determinate of the actual worth of the home; it is unnecessary to do an interior appraisal.
Fact: To determine an accurate worth beyond all doubt, an appraiser must assess the house on a variety of factors based on location, condition, improvements, amenities, and current market trends. There's no real way to get all of this data from simply examining the house from the outside.
Myth: Because 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, by law the appraisal report belongs to them.
Fact: Legally, the appraisal is owned by the lending agency unless the lender relinquishes their interest in the report. Under the Equal Credit Opportunity Act, any consumer requesting a copy of the document must be provided with one by their lending company.
Myth: There's no reason for home buyers to even concern themselves with what the appraisal report contains so long as their lending agency is fine with the contents therein.
Fact: Only if consumers check out a copy of their appraisal report can they ensure its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes an excellent record for future reference, filled with useful and often-revealing information - 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 proximity.
Myth: There is no reason to order an appraisal unless you are trying to get an estimate of the value of a house during a sales transaction involving a lending institution.
Fact: Depending upon their qualifications and designations, appraisers can and do provide a lot of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A home inspection serves the same purpose as an appraisal.
Fact: Appraisal reports are completely different than a home inspection report. The appraiser decides upon an opinion of value in the appraisal process and resulting appraisal. House inspectors will produce a report that will show the condition of the home and its major components and possible damage.