Myth: Market value should be equivocal to the assessed value of the property.
Reality: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always.
Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby properties are excellent examples of why the price can vary.
Myth: The buyer or the seller sometimes may have an influence in the cost of the home depending upon for whom the appraiser is working.
Reality: The value of the home does not affect the payment of the appraiser; as such, the appraiser has no pressured interest in the opinion of value of the property. Obviously, he will conduct job with impartiality and objectivity regardless of for whom the appraisal is produced.
Myth: The replacement value of the property is always in line with the market value.
Reality: The way market value is arrived at is based on what a home buyer would likely pay a willing seller for a property without being under duress from any external group to purchase or sell.
If the house were reconstructed, the dollar amount needed to do so would set the replacement cost.
Myth: There are specific methods that appraisers use to show the value of a house, like the price per square foot.
Reality: Appraisers complete a detailed analysis of all factors pertaining to the value of a property, including its location, condition, size, proximity to facilities and recent sale prices of comparable houses.
Myth: As homes appreciate by a specific percentage - in a strong economic state - the homes nearby are figured to increase by the same amount.
Reality: All increase of value is on a one-on-one basis, found by information on relevant elements and the data of comparable houses.
It makes no difference if the economy is robust or poor.
Myth: The house's exterior is determinate of the expected price of the home; it is unnecessary to do an interior inspection.
Reality: To find a concrete value beyond all doubt, an appraiser must examine the home on a variety of factors based on area, condition, improvements, amenities, and market trends.
An outside-only inspection definitely can't provide all of the information needed.
Myth: Since you're the one providing the money for the appraisal report when applying for the loan to buy or refinance real estate, you own the produced appraisal.
Reality: The document is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the appraisal report.
However, home buyers must be given a copy of the appraisal upon written request, under the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the appraisal report so long as it satisfies the requirements of their lender.
Reality: It is almost imperative for home buyers to go through a copy of their report so that they can verify 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.
Also, the appraisal makes a valuable record for future reference, comprised of useful and often-revealing 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 order an appraisal is if a property needs its value estimated in a lender-based sales transaction.
Reality: Based upon their qualifications and designations, appraisers can and will perform a series of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal report is the same as a home inspection report.
Reality: Appraisal reports are completely different than a home inspection report.
An appraiser forms an opinion of value in the appraisal process and resulting document.
The task of a home inspector is to find the condition of the house and its major components, then provide a report on these findings.
