Appraisal myths & facts
By law, an appraiser is required to be state-licensed to perform appraisals for federally-supported purchases. Also by law, you are allowed to demand a copy of the completed appraisal from your lending agency. Contact us if you have any questions about the appraisal procedure.
Myth: Assessed value should be similar to to market value.
Fact: It could be that California, like most states, validates the suggestion that the assessed value is no different from the market value; however, this certainly varies based on state-to-state. Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby homes are excellent examples of why this occurs.
Myth: The opinion of value of a home will vary depending upon if the appraisal is produced for the buyer or the seller.
Fact: The appraiser has no vested interest in the result of the report and should conduct his job with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: The replacement value of the home is always is on par with the market value.
Fact: Market value is arrived at through what a willing buyer would likely pay a willing seller for a particular house, with neither being under undue influence to buy or sell. If the property were reconstructed, the dollar amount needed to do so would set the replacement cost.
Myth: Certain formulae, such as the price per square foot, are what appraisers use to come to the value of a property.
Fact: There are many numerous formulae that an appraiser will use to make an in-depth analysis of every factor pertaining to the house, such as the size, location, condition, how close it is to certain facilities and the value of recently sold comparable houses.
Myth: As homes increase their worth by a specific percentage - in a strong economic state - the homes within the same neighborhood are expected to increase by the same amount.
Fact: Worth increase of a specific home has to be concluded on an individualized basis, factoring in data on comparable homes and other relevant considerations. This is true in strong economic times as well as bad.
Have other questions about appraisers, appraising or real estate in Los Angeles County or Los Angeles, CA?Contact us
Myth: You can commonly tell what a house is worth simply by looking at the exterior.
Fact: Home worth is concluded by a multitude of variables, including area, condition, improvements, amenities, and market trends. Obviously, none of these variables can be derived just by viewing the property from the outside.
Myth: Since you're the one providing the money for the appraisal report when applying for your loan to buy or refinance your house, you own the provided appraisal report.
Fact: Legally, the appraisal is owned by the lending company unless the lender releases their interest in the appraisal. Because of the Equal Credit Opportunity Act, any consumer demanding a copy of the document must be provided with it by their lending company.
Myth: There's no point for home buyers to even concern themselves with what the appraisal report contains so long as their lending company is satisfied.
Fact: It is very important for consumers to peruse 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 accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes a valuable 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 area.
Myth: There is no reason to order an appraisal unless you are trying to get an estimate of the worth of a house during a sales transaction involving a lender.
Fact: Depending upon their qualifications and designations, appraisers can and will perform a lot of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: You don't have to get an appraisal if you have had a home inspection.
Fact: Appraisal reports have almost nothing in common with a home inspection. The appraiser decides upon an opinion of value in the appraisal process and resulting report. House inspectors will write a report that will explain the condition of the home and its major components and possible damage.