Common myths about appraising
It is mandated by the government that an appraiser is required to be state-licensed to perform appraisals for federally-related real estate sales in Arizona. You are also entitled by law to demand a copy of the finished report from your lender. Contact Phoenix Valuations, LLC if you have any questions about the appraisal procedure.
Myth: Market value will be similar to the assessed value of the property.
Fact: While most states uphold the suggestion that assessed value is equal to estimated market value, this commonly is not the case. There are times when interior remodeling has been done and the assessor is unaware 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 done for the buyer or the seller, the appraised value of the house will vary.
Fact: The appraiser has no personal interest in the outcome of the appraisal report and should conduct his task with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: The replacement value of the home will be is on par with the market value.
Fact: Without any suggestion from any different parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific property. The dollar amount needed to reconstruct a home is what shows the replacement cost.
Myth: Specific formulae, like the price per square foot of the property, are what appraisers use to determine the worth of a property.
Fact: Appraisers complete a comprehensive analysis of all factors pertaining to the cost of a house, including its location, condition, size, proximity to facilities and recent sale prices of comparable properties.
Myth: In a strong economy - when the values of properties in a given county are reported to be increasing by a certain percentage - the values of individual houses in the area can be expected to increase by that same percentage.
Fact: Value increase of a certain home is always concluded on an individualized basis, factoring in information on comparable properties and other relevant considerations. This is true in excellent economic times as well as poor.
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Myth: Just looking at what the house looks like on its exterior gives a good idea of its value.
Fact: To determine an accurate worth beyond all doubt, an appraiser must inspect the property on a variety of factors based on area, condition, improvements, amenities, and market trends. Obviously, none of these things can be derived just by viewing the home from the outside.
Myth: Because consumers fund the appraisal when applying for loans to buy or refinance their house, they legally own their appraisal.
Fact: The appraisal report is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the document. However, consumers have to be provided with a copy of the appraisal upon written request, through the Equal Credit Opportunity Act.
Myth: Consumers need not be concerned with what is in their document so long as it exceeds the necessities of their lending institution.
Fact: A home buyer should definitely inspect their appraisal report; there will probably be some questions or some worries with the accuracy of the analysis that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes a near perfect record for future reference, containing 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: Appraisers are hired only to assess building values in home sales involving mortgage-lending deals.
Fact: Based 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 house inspection serves the same purpose as an appraisal.
Fact: A home inspection has a completely different purpose than an appraisal. The function of an appraisal is to arrive at an opinion of fair market value during the appraisal process and the completion of the report. A home inspector analyzes the condition of the building and its major components and reports these findings.