Myth: Market value should be similar to the assessed value of the property.
Reality: It is possible that California, like most states, validates the suggestion that the assessed value equates to the market value; however, this is not often the case.
Examples include when interior reconstruction has happened and the assessor is unaware of the improvements, or when homes in the vicinity have not been reassessed for an extended time.
Myth: The opinion of value of a property will change depending upon if the appraisal is conducted for the buyer or the seller.
Reality: The appraiser has no vested interest in the outcome of the report and should render services with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: The replacement cost of the house should be on par with the market value.
Reality: Without any influence from any outside parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific house.
Replacement cost is the dollar amount required to reconstruct a home in-kind.
Myth: Certain methods, like the price per square foot, are the methods appraisers use to ascertain the value of a house.
Reality: There are many numerous ways that an appraiser will use to make a comprehensive investigation of every factor in consideration of the home, such as the size, location, condition, how close it is to specific facilities and the values of recently sold comparable houses.
Myth: When the economy is doing well and the sales prices of houses are found to be appreciating by a certain percentage, the other houses in the vicinity can be expected to increase based on that same percentage.
Reality: Any value an appraiser reports concerning a specific house is always individualized, based on certain factors derived from the information of comparable homes and other specifications within the home itself.
This is true in excellent economic times as well as bad.
Myth: Just seeing what the house looks like on its exterior gives an idea of its value.
Reality: To determine a genuine value beyond all doubt, an appraiser must assess the home on a variety of factors based on location, condition, improvements, amenities, and market trends.
An outside-only inspection certainly can't provide all of the information needed.
Myth: Since you're the one coughing up the cash for the appraisal report when applying for the loan to buy or refinance your house, you own the produced appraisal report.
Reality: Unless a lender releases its vestment in the report, it is legally owned by the lending company that ordered the appraisal.
However, home buyers have to be supplied with a copy of the document upon written request, due to the Equal Credit Opportunity Act.
Myth: There's no need for home buyers to even care about what the report contains so long as their lender is fine with the contents therein.
Reality: It is almost imperative for consumers to check over a copy of their appraisal report so that they can double-check the accuracy of the document, 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.
An appraisal can serve as a record for the future, as it contains a great deal 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: The only reason someone would order an appraisal is if a property needs its value estimated in a lender-based sales transaction.
Reality: Hiring an appraiser can fulfill a variety of requirements depending on the designations and certifications of the appraiser involved; appraisers can provide a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: You don't need to get an appraisal if you get a home inspection.
Reality: An appraisal does not fulfill the same purpose as an inspection.
The appraiser forms an opinion of value in the appraisal process and resulting appraisal.
The job of a home inspector is to assess the condition of the home and its main components, then create a report on their conclusions.