Myth: The value that is ascertained by the appraiser must be the same as the market value.
Reality: While most states support the suggestion that assessed value is the same as estimated market value, this usually is not the case.
Examples include when interior reconstruction has occurred and the assessor is unaware of the improvements, or when properties in the vicinity have not been reassessed for an prolonged period of time.
Myth: Depending on whether the appraisal is written for the buyer or the seller, the opinion of value of the house will vary.
Reality: The appraiser has no personal interest in the outcome of the appraisal report and should complete his task with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Market value should be the same as replacement cost.
Reality: Market value is based on what a willing buyer would be interested in paying a willing seller for a particular home, with neither being under undue influence to buy or sell.
If the property were rebuilt, the dollar amount needed to do so would form the replacement cost.
Myth: There are specific methods that real estate appraisers use to determine the opinion of value of a house, like the price per square foot.
Reality: There are many different formulae that an appraiser will use to make an in-depth analysis of every factor in consideration of the home, such as the size, location, condition, how close it is to undesirable facilities and the values of recently sold comparable properties.
Myth: As houses increase in value by a certain percentage - in a strong economic state - the properties within the same neighborhood are expected to appreciate by the same amount.
Reality: Any value an appraiser reports concerning a certain home is always personalized, based on certain factors derived from the information of comparable properties and other specifications within the house itself.
It makes no difference if the economy is strong or on the decline.
Myth: Just examining what the property looks like on its exterior gives an idea of its value.
Reality: To determine a genuine value beyond all doubt, an appraiser must inspect the property on a variety of factors based on location, condition, improvements, amenities, and market trends.
Obviously, none of these variables can be derived simply by inspecting the home from the exterior.
Myth: Since you're the one funding for the appraisal when applying for your loan to buy or refinance real estate, you own the ordered appraisal.
Reality: Unless a lender releases its interest in the report, it is legally owned by the lending company that ordered the appraisal.
However, home buyers must be given a copy of the document upon written request, under the Equal Credit Opportunity Act.
Myth: It doesn't concern consumers what's in the appraisal so long as it satisfies the requirements of their lender.
Reality: A home buyer should definitely look through their appraisal; there will probably be some questions or some concerns with the accuracy of the report that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make.
Also, the appraisal report makes an excellent record for future reference, comprised of helpful and often-revealing information - including 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 proximity.
Myth: There is no reason to hire an appraiser unless you are trying to get an assessment of the value of a property during a sales transaction involving a lender.
Reality: 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: A house inspection serves the same purpose as an appraisal.
Reality: An appraisal does not fulfill the same purpose as an inspection.
The appraiser concludes on an opinion of value in the appraisal process and resulting report.
The purpose of a home inspector is to approximate the condition of the property and its major components, then provide a report on their findings.
