Appraisal myths debunked

By law, an appraiser is required to be state-licensed to produce appraisals for federally-backed sales. Also by law, you are entitled to receive a copy of the completed report from your lending agency. Contact us if you have any concerns about the appraisal procedure.

Myth: Market value will be equivocal to the assessed value of the property.

Fact: While most states support the suggestion that assessed value is the same as estimated market value, this usually is not the case. Interior reconstruction that the assessor is not aware of and a dearth of reassessment on nearby houses are prime examples of why the price can vary.

Myth: The appraised value of a home will change depending upon if the appraisal is provided for the buyer or the seller.

Fact: The appraised value of the home does not affect the salary of the appraiser; because of this, the appraiser has no vested interest in the opinion of value of the house. What this means is he will conduct job with impartiality and independence regardless for whom the appraisal is created.

Myth: Any time market value is found, it should equate to the replacement cost of the house.

Fact: The way market value is arrived at is based on what a home buyer would be willing to pay a willing seller for a house without being under pressure from any external party to buy or sell. If the home were reconstructed, the dollar amount necessary to do so would make up the replacement cost.

Myth: Appraisers use a calculation, like a certain price per square foot, to conclude the cost of a home.

Fact: Appraisers complete a comprehensive analysis of all factors in consideration to the worth of a property, including its location, condition, size, proximity to facilities and recent costs of comparable houses.

Myth: As properties appreciate by a specific percentage - in a strong economy - the properties nearby are expected to increase by the same amount.

Fact: All appreciation of value is on a one-on-one basis, concluded by data on relevant considerations and the data of comparable homes. It makes no difference whether the economy is excellent or terrible.

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Myth: Just looking at what the property looks like on its exterior gives an excellent idea of its cost.

Fact: Property value is determined by a number of factors, including - but not limited to - location, condition, improvements, amenities, and market trends. As you can see, none of these factors can be found just by viewing the house from the exterior.

Myth: Because consumers fund appraisal reports when applying for loans to purchase or refinance their home, they legally own their appraisal report.

Fact: Legally, the appraisal report is owned by the lending company unless the lender releases their interest in the report. However, consumers must be supplied with a copy of the document upon written request, through the Equal Credit Opportunity Act.

Myth: It doesn't concern consumers what's in the report so long as it satisfies the needs of their lender.

Fact: It is a very good idea for consumers to look at a copy of their appraisal report so that they can verify the accuracy of the document, in case they need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can serve as a record for the future, since it contains an incredible amount of information - including, but certainly 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: Appraisers are hired only to estimate house values in house sales involving mortgage-lending deals.

Fact: Appraisers can have many varied qualifications and designations which allow them to perform a multitude of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.

Myth: You don't have to get an appraisal if you order a home inspection.

Fact: A home inspection report has a completely different purpose than an appraisal report. An appraiser concludes on an opinion of value in the appraisal process and resulting document. The point of a home inspector is to determine the condition of the home and its main components, then compose a report on these inspection.