Myth: Market value needs to be similar to the assessed value of the property.
Reality: It might be that California, like most states, supports the suggestion that the assessed value is the same as the market value; however, this is not often the case.
Sometimes when interior remodeling has been done and the assessor is unaware of the improvement or other houses in the Los Angeles have not been reassessed for quite some time, it may vary widely.
Myth: The buyer or the seller sometimes may have leverage in the value of the property depending upon for whom the appraiser is working.
Reality: The appraised value of the home does not affect the pay of the appraiser; because of this, the appraiser has no preconceived interest in the value of the house. Obviously, he will conduct job with impartiality and objectivity regardless of for whom the appraisal is created.
Myth: The replacement value of the property is always in line with the market value.
Reality: Without any pressure from any different parties to buy or sell, market value is what a willing buyer would pay an interested seller for a particular home.
The dollar amount demanded to reconstruct a home is what constitutes the replacement cost.
Myth: Specific methods, such as the price per square foot of the property, are what appraisers use to arrive at the value of a home.
Reality: There are many different ways that an appraiser will use to make a full analysis of every factor pertaining to the house, such as the size, location, condition, how close it is to certain facilities and the sales prices of recently sold comparable homes.
Myth: In a strong economy - when the prices of homes in a given neighborhood are reported to be increasing by a particular percentage - the values of individual homes in the proximity can be expected to rise by that same percentage.
Reality: Any value an appraiser derives concerning a certain property is always individualized, based on certain factors found from the data of comparable homes and other specifications within the house itself.
It doesn't matter if the economy is on the rise or declining.
Myth: You can commonly find what a property is worth simply by looking at the outside.
Reality: There are a multitude of different factors that conclude the value of a house; these factors include location, condition, improvements, amenities, and market trends.
Obviously, none of these variables can be found simply by examining the home from the outside.
Myth: Since you're the one funding for the appraisal when applying for the loan to purchase or refinance real estate, you own the provided appraisal.
Reality: Unless a lending agency releases its interest in the document, it is legally owned by the lending agency that ordered the appraisal.
Under the Equal Credit Opportunity Act, any consumer asking for a copy of the document must be given it by their lending company.
Myth: There's no need for home buyers to even concern themselves with what the appraisal report contains so long as their lending agency is fine with the contents therein.
Reality: It is very important for consumers to look at a copy of their report so that they can double-check the accuracy of the report, in case there is a need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make.
An appraisal report can double as a record for the future, containing an incredible amount 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 area.
Myth: The only reason someone would hire an appraiser is if a home needs its value estimated in a lender-based sales transaction.
Reality: Based upon their qualifications and designations, appraisers can and will provide a multitude of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: You shouldn't need to get an appraisal if you have had a home inspection.
Reality: A home inspection has a completely different purpose than an appraisal report.
The appraiser forms an opinion of value in the appraisal process and resulting appraisal.
The job of a home inspector is to find the condition of the house and its major components, then provide a report on their inspection.