Myth: Assessed value generally will equate market value.
Reality: It is probable that California, like most states, supports the idea that the assessed value equates to the market value; however, this is sometimes the exception rather than the rule.
Examples include when interior reconstruction has happened and the assessor does not know about the improvements, or when houses in the area have not been reassessed for an prolonged period.
Myth: Depending on whether the appraisal is produced for the buyer or the seller, the cost of the house will vary.
Reality: The appraised value of the home does not affect the salary of the appraiser; as a result, the appraiser has no personal interest in the opinion of value of the property. Obviously, he will complete his business with impartiality and independence regardless of for whom the appraisal is created.
Myth: Any time market value is established, it should be the same as the replacement cost of the house.
Reality: Without any suggestion from any external parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a specific property.
Replacement value is the dollar amount needed to rebuild a house in-kind.
Myth: Certain formulae, like the price per square foot, are the methods appraisers use to come to the value of a property.
Reality: There are many different ways that an appraiser will use to make an in-depth analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to undesirable facilities and the sales prices of recently sold comparable houses.
Myth: As properties appreciate by a specific percentage - in a strong economic state - the houses around the appreciating properties are figured to increase by the same amount.
Reality: Any value an appraiser derives in regards to a particular home is always individualized, based on certain factors concluded from the information of comparable houses and other specifications within the home itself.
This is true in excellent economic times as well as bad.
Myth: Just seeing what the property looks like on its exterior gives a good idea of its value.
Reality: House value is determined by a number of variables, including location, condition, improvements, amenities, and market trends.
As you can see, none of these factors can be derived simply by viewing the home from the exterior.
Myth: Since the consumer is the person who puts up the money to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal report is theirs.
Reality: Legally, the appraisal is owned by the lender unless the lender relinquishes their interest in the appraisal.
However, consumers have to be supplied with a copy of the report upon written request, under the Equal Credit Opportunity Act.
Myth: There's no reason for home buyers to even worry about what the appraisal contains so long as their lending company is fine with the contents therein.
Reality: Only when consumers read a copy of their appraisal report can they verify its accuracy and know if they should ask questions. Remember, this is probably the most expensive and important investment a consumer will ever make.
There is a great deal of information contained in an appraisal report that will probably be useful to the consumer in the future, such as 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 estimate real estate property values in property sales involving mortgage-lending deals.
Reality: Appraisers can have many different qualifications and designations which allow them to provide a lot of different services including - but definitely not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: An appraisal report is the same as a home inspection.
Reality: A home inspection serves a completely different purpose than an appraisal report.
An appraiser concludes on an opinion of value in the appraisal process and resulting appraisal.
A home inspector assesses the condition of the building and its main components and reports their findings.