Myth: Market value has to be similar to the assessed value of the property.
Reality: While most states back the suggestion that assessed value is equal to estimated market value, this commonly is not the case.
Examples include when interior reconstruction has happened and the assessor does not know about 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 done for the buyer or the seller, the value of the house will vary.
Reality: The appraiser has no personal interest in the outcome of the report and should render his job with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Market value will equate to replacement cost.
Reality: The way market value is derived is based on what a buyer would likely pay a willing seller for a property without being under pressure from any external party to purchase or sell.
If the property were reconstructed, the dollar amount required to do so would be the replacement cost.
Myth: There are specific methods that appraisers use to determine the value of a property, such as the price per square foot.
Reality: Appraisers make a comprehensive analysis of all factors in consideration to the value of a house, including its location, condition, size, proximity to facilities and recent values of comparable properties.
Myth: In a powerful economy - when the values of homes in a given region are reported to be rising by a particular percentage - the prices of individual properties in the vicinity can be expected to appreciate by that same percentage.
Reality: Any value an appraiser reports concerning a particular home is always personalized, based on certain factors derived from the information of comparable houses and other considerations within the property itself.
This is true in robust economic times as well as bad.
Myth: You can often find what a home is worth simply by looking at the outside.
Reality: To conclude a conclusive value beyond all doubt, an appraiser must examine the house on a variety of factors based on location, condition, improvements, amenities, and current market trends.
There's no real way to get all of this data from just examining the property from the outside.
Myth: Since you're the one funding for the appraisal report when applying for your loan to purchase or refinance real estate, you own the ordered appraisal report.
Reality: Unless a lending agency releases its vestment in the report, it is legally owned by the lending company that purchased the appraisal.
Under the Equal Credit Opportunity Act, any consumer demanding a copy of the report must be provided with it by their lending company.
Myth: It doesn't concern consumers what's in the appraisal so long as it satisfies the requirements of their lending company.
Reality: A home buyer should definitely read through their report; there could be some questions or some worries with the accuracy of the inspection that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make.
There is a great deal of information stored in an appraisal that will probably 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 area.
Myth: The only reason someone would order an appraisal is if a house needs its value estimated in a lender sales transaction.
Reality: Based upon their qualifications and designations, appraisers can and may perform a variety of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A house inspection serves the same purpose as an appraisal.
Reality: Appraisal reports have almost nothing in common with a home inspection report.
The purpose of the appraiser is to conclude an opinion of value in the appraisal process and through creating the report.
House inspectors will produce a report that will determine the condition of the property and its major components and possible damage.