Appraisal myths debunked
By law, an appraiser needs to be state-licensed to produce appraisals for federally-supported sales. You have the ability to request a copy of the finished appraisal report from your lending agency. Contact us if you have any concerns about the appraisal procedure.
Myth: The value that is ascertained by the appraiser should be equivalent to the market value.
Fact: While most states support the concept that assessed value is equal to estimated market value, this often is not the case. Examples include when interior reconstruction has happened and the assessor is unaware of the improvements, or when houses in the vicinity have not been reassessed for an prolonged period.
Myth: The opinion of value of a property will vary depending upon if the appraisal is conducted for the buyer or the seller.
Fact: The appraiser has no personal interest in the result of the appraisal report and should render services with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Market value will equal replacement cost.
Fact: Without any pressure from any outside parties to buy or sell, market value is what a willing buyer would pay a willing seller for a particular house. Replacement cost is the dollar amount required to rebuild a property in-kind.
Myth: Appraisers use a formula, such as a certain price per square foot, to conclude the value of a house.
Fact: Appraisers make an exhaustive analysis of all factors pertaining to the value of a house, including its location, condition, size, proximity to facilities and recent sale prices of comparable houses.
Myth: As houses appreciate by a specific percentage - in a robust economic state - the houses around the appreciating properties are expected to appreciate by the same amount.
Fact: Cost appreciation of a specific property has to be determined on a case-by-case basis, factoring in data on comparable homes and other relevant elements. This is true in good economic times as well as bad.
Have other questions about appraisers, appraising or real estate in Arapahoe County or Aurora, CO?Contact Appraise Colorado Inc
Myth: You can often find what a home is worth simply by looking at the exterior.
Fact: To find an accurate value beyond all doubt, an appraiser must assess the house on a variety of factors based on location, condition, improvements, amenities, and current market trends. There's no possible way to get all of this information from just inspecting the home from the outside.
Myth: Because consumers pay for appraisals when applying for loans to buy or refinance their home, they legally own their appraisal report.
Fact: The appraisal is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the document. Due the Equal Credit Opportunity Act, any consumer requesting a copy of the report must be provided with one by their lending company.
Myth: It doesn't mean anything to consumers what's in the report so long as it meets the needs of their lender.
Fact: A consumer should definitely read through their appraisal report; there may be some questions or some worries with the accuracy of the appraisal that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can double as a record for the future, as 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: There is no reason to hire an appraiser unless you are trying to get an assessment of the worth of a home during a sales transaction involving a lender.
Fact: Hiring an appraiser 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: You shouldn't need to get an appraisal if you get a home inspection.
Fact: A home inspection has a completely different purpose than an appraisal report. The job of the appraiser is to form an opinion of value in the appraisal process and through creating the report. A home inspector analyzes the condition of the home and its major components and reports their findings.