Appraisal myths debunked
Legally, an appraiser must be state certified to create substantiated appraisal reports for federally-supported transactions. The law entitles you to receive a copy of your finished report from your lending agency after it has been produced. Contact us if you have any concerns about the appraisal procedure.
Myth: Market value will always be the same as the assessed value of the property.
Fact: It is possible that California, like most states, supports the common myth that the assessed value equals the market value; however, this is not always true. Examples include when interior reconstruction has happened and the assessor is unaware of the improvements, or when houses in the vicinity have not been reassessed for an prolonged period.
Myth: The appraised value of a house will change depending upon if the appraisal is conducted for the buyer or the seller.
Fact: The appraiser has no personal interest in the outcome of the report and should conduct his job with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Any time market value is established, it should equate to the replacement cost of the house.
Fact: Without any influence from any external parties to buy or sell, market value is what a willing buyer would pay a willing seller for a particular house. If the home were reconstructed, the dollar amount necessary to do so would form the replacement cost.
Myth: Specific methods, like the price per square foot, are the methods appraisers use to arrive at the cost of a home.
Fact: There are many different calculations that an appraiser will use to make a detailed analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to specific facilities and the sales price of recently sold comparable houses.
Myth: As properties appreciate by a specific percentage - in a robust economic state - the houses around the appreciating properties are figured to appreciate by the same amount.
Fact: All appreciation of value is on an individual basis, found by information on relevant conditions and the data of comparable houses. This is true in fair economic times as well as poor.
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Myth: Just looking at what the property looks like on its exterior gives an idea of its value.
Fact: To conclude an accurate price beyond all doubt, an appraiser must assess the property on a variety of factors based on area, condition, improvements, amenities, and current market trends. There's no real way to get all of this information from just inspecting the property from the exterior.
Myth: Since you're the one providing the money for the appraisal when applying for the loan to buy or refinance real estate, you own the produced appraisal.
Fact: Legally, the appraisal is owned by the lender unless the lender relinquishes their interest in the appraisal. Home buyers have to be supplied with a copy of the document through request due to the Equal Credit Opportunity Act.
Myth: It doesn't matter to consumers what's in the report so long as it satisfies the requirements of their lender.
Fact: It is a very good idea for home buyers to look at a copy of their report so that they can verify 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 report can serve as a record for the future, containing a great deal of 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 area.
Myth: There is no reason to hire an appraiser unless you are trying to get an estimate of the value of a home during a sales transaction involving a lending company.
Fact: Appraisers can have many different qualifications and designations which allow them to provide a variety of different services including - but not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: A house inspection serves the same purpose as an appraisal.
Fact: Appraisal reports are definitely not the same as a home inspection report. The task of the appraiser is to form an opinion of value in the appraisal process and through producing the report. The job of a home inspector is to approximate the condition of the home and its main components, then provide a report on their inspection.