Appraisal myths debunked
By law, an appraiser must be state-licensed to perform appraisals for federally-related sales. You also have the right to acquire a copy of the finished appraisal from your lending agency. Contact Appraise Colorado Inc if you have any concerns about the appraisal procedure.
Myth: Assessed value should always equate to market value.
Fact: This is not often the case; most states do support the concept that the assessed value is the same as market value, but not always. Examples include when interior remodeling has occurred and the assessor does not know about the improvements, or when properties in the vicinity have not been reassessed for an prolonged period.
Myth: The buyer or the seller will have impact in the cost of the property depending upon for whom the appraiser is working.
Fact: There is no personal interest on the part of the appraiser in the outcome of the appraisal report, therefore he will conduct his work with impartiality and independence, despite for whom the appraisal is conducted.
Myth: Market value should equal replacement cost.
Fact: Market value is arrived at through what a willing buyer would likely pay a willing seller for a specific home, with neither being under duress to buy or sell. The dollar amount needed to rebuild a house is what shows the replacement cost.
Myth: There are certain ways that appraisers use to find the opinion of value of a home, such as the price per square foot.
Fact: There are many differing calculations that an appraiser will use to make a full analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to certain facilities and the cost of recently sold comparable homes.
Myth: In a powerful economy - when the sales prices of houses in a given neighborhood are found to be increasing by a particular percentage - the values of individual homes in the vicinity can be expected to appreciate by that same percentage.
Fact: Any value at which an appraiser concludes concerning a specific house is always individualized, based on certain factors pulled from the data of comparable homes and other considerations within the home itself. This is true in good economic times as well as bad.
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Myth: You can commonly find what a house is worth simply by looking at the exterior.
Fact: House value is determined by a number of variables, including area, condition, improvements, amenities, and market trends. There's no real way to get all of this information from just examining the home from the outside.
Myth: Since the consumer is the party who provides the funding to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal is theirs.
Fact: The appraisal is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the appraisal. However, home buyers must be provided with a copy of the appraisal upon written request, because of the Equal Credit Opportunity Act.
Myth: It doesn't concern consumers what's in the appraisal report so long as it meets the requirements of their lender.
Fact: Only if consumers check out a copy of their appraisal can they ensure its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of data contained in an appraisal report that could 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: Appraisers are hired only to assess building values in property sales involving mortgage-lending deals.
Fact: Appraisers can have many different qualifications and designations which allow them to provide a lot 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 need to get an appraisal if you have had a home inspection.
Fact: A home inspection serves a completely different purpose than an appraisal report. The appraiser decides upon an opinion of value in the appraisal process and resulting appraisal. A home inspector analyzes the condition of the home and its main components and reports these findings.