Myth: Market value must be the same as the assessed value of the property.
Reality: This usually isn't true; most states do support the suggestion that the assessed value is the same as market value, but not always.
Examples include when interior reconstruction has occurred and the assessor is unaware of the improvements, or when homes in the area have not been reassessed for an prolonged period of time.
Myth: The value of a property will be different depending upon if the appraisal is provided for the buyer or the seller.
Reality: The appraiser has no vested interest in the outcome of the appraisal and should conduct his task with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Market value should equal replacement cost.
Reality: Market value is derived from what a willing buyer would be interested in paying a willing seller for a certain property, with neither being under pressure to buy or sell.
If the home were rebuilt, the dollar amount needed to do so would set the replacement cost.
Myth: There are certain ways that appraisers use to find the value of a home, such as the price per square foot.
Reality: Appraisers complete a comprehensive analysis of all factors in consideration to the value of a house, including its location, condition, size, proximity to facilities and recent sale prices of comparable houses.
Myth: When the economy is strong and the sales prices of houses are found to be appreciating by a certain percentage, the other homes in the proximity can be expected to increase based on that same percentage.
Reality: All appreciation of value is on an individual basis, determined by information on relevant considerations and the data of comparable houses.
It makes no difference whether the economy is excellent or bad.
Myth: You can generally find what a home is worth simply by looking at the outside.
Reality: There are a multitude of different variables that conclude the value of a house; these factors include area, condition, improvements, amenities, and market trends.
An exterior inspection definitely can't provide all of the data needed.
Myth: Because consumers pay for the appraisal when applying for loans to purchase or refinance their property, they legally own their appraisal.
Reality: Legally, the document is owned by the lending agency unless the lender releases their interest in the document.
Under the Equal Credit Opportunity Act, any home buyer asking for a copy of the appraisal report must be given it by their lender.
Myth: Consumers need not be concerned with what is in their appraisal report so long as it meets the needs of their lending company.
Reality: Only when consumers read a copy of their appraisal report can they double-check its accuracy and know if they should ask questions. Remember, this is probably the most expensive and important investment a consumer will ever make.
Also, the appraisal report makes an invaluable record for future reference, containing 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 hire an appraiser unless you are trying to get an assessment of the value of a house during a sales transaction involving a lending institution.
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: A property inspection serves the same purpose as an appraisal.
Reality: Appraisal reports have almost nothing in common with a home inspection.
The purpose of an appraisal is to conclude upon an opinion of market value during the appraisal process and the production of the appraisal.
House inspectors will compose a report that will determine the condition of the property and its major components and possible damage.