Appraisal myths debunked
It is required by law that a real estate appraiser is required to be state-licensed to offer appraisals for federally-related home sales in California. The law allows you to receive a copy of your completed report from your lending agency after it has been provided. Contact our professional staff if you have any concerns about the appraisal process.
Myth: Market value must be similar to the assessed value of the property.
Fact: It might be that California, like most states, supports the suggestion that the assessed value is no different from the market value; however, this is not always true. There are times when interior remodeling has been done and the assessor is not aware of the improvement or properties in the area have not been reassessed for a good length of time, it may vary wildly.
Myth: The buyer or the seller sometimes may have some pull in the value of the property depending upon for whom the appraiser is working.
Fact: There is no personal interest on the part of the appraiser in the result of the analysis, therefore he will conduct his work with impartiality and independence, despite for whom the appraisal is created.
Myth: Any time market value is established, it should be the same as the replacement cost of the home.
Fact: Market value is based on what a willing buyer would likely pay a willing seller for a particular house, with neither being under pressure to buy or sell. Replacement value is the dollar amount necessary to reconstruct a property in-kind.
Myth: Specific methods, such as the price per square foot, are what appraisers use to ascertain the value of a property.
Fact: There are many numerous processes that an appraiser will use to make a comprehensive analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to specific facilities and the opinion of value of recently sold comparable properties.
Myth: As homes increase their worth by a specific percentage - in a robust economy - the properties nearby are figured to appreciate by the same amount.
Fact: All appreciation of value is on an individual basis, concluded by information on relevant considerations and the data of comparable houses. This is true in good economic times as well as bad.
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Myth: You can usually find what a property is worth simply by looking at the outside.
Fact: To determine an accurate price beyond all doubt, an appraiser must assess the home on a variety of factors based on area, condition, improvements, amenities, and current market trends. An outside-only inspection certainly can't provide all of the data necessary.
Myth: Because consumers fund appraisals when applying for loans to buy or refinance real estate, they legally own their appraisal report.
Fact: The appraisal report is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the appraisal report. However, consumers have to be given a copy of the report upon written request, due to the Equal Credit Opportunity Act.
Myth: Consumers need not worry about what is in their appraisal document so long as it satisfies the needs of their lending company.
Fact: Only if consumers examine a copy of their appraisal report can they verify its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of data contained in an appraisal report that can 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 region.
Myth: There is no reason to order an appraisal unless you are trying to get an assessment of the worth of a house during a sales transaction involving a lender.
Fact: Ordering an appraisal can fulfill a variety of necessities depending on the designations and certifications of the appraiser involved; appraisers can perform a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: There's no need to get an appraisal if you order a home inspection.
Fact: Appraisal reports are completely different than a home inspection report. An appraiser forms an opinion of value in the appraisal process and resulting document. A home inspector analyzes the condition of the house and its major components and reports their findings.