Common myths about appraising

By law, an appraiser is enforced to be state-licensed to produce appraisals for federally-supported transactions. Also by law, you have the ability to receive a copy of the completed appraisal report from your lending agency. Contact our professional staff if you have any concerns about the appraisal procedure.

Myth: Market value needs to be the same as the assessed value of the property.

Fact: 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. Examples include when interior reconstruction has happened and the assessor is unaware of the improvements, or when properties in the area have not been reassessed for an extended period.

Myth: Depending on if the appraisal is produced for the buyer or the seller, the opinion of value of the house will vary.

Fact: The cost of the house does not affect the pay of the appraiser; as a result, the appraiser has no vested interest in the worth of the house. This means that he will render business with impartiality and independence regardless for whom the appraisal is created.

Myth: Any time market value is found, it should be similar to the replacement cost of the home.

Fact: Without any influence from any different parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a specific home. The dollar amount required to reconstruct a home is what forms the replacement cost.

Myth: Appraisers use a calculation, like a certain price per square foot, to conclude the worth of a property.

Fact: There are many different processes that an appraiser will use to make a detailed analysis of every factor in consideration of the home, such as the size, location, condition, how close it is to certain facilities and the worth of recently sold comparable houses.

Myth: In a strong economy - when the values of properties in a given region are found to be appreciating by a certain percentage - the worth of individual houses in the proximity can be expected to increase by that same percentage.

Fact: Worth appreciation of a certain home must be concluded on a case-by-case basis, factoring in information on comparable properties and other relevant considerations. It doesn't matter if the economy is on the rise or declining.

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Myth: Just seeing what the property looks like on its exterior gives an idea of its worth.

Fact: Home value is determined by a multitude of factors, including area, condition, improvements, amenities, and market trends. There's no real way to get all of this information from just inspecting the house from the exterior.

Myth: Because consumers pay for appraisal reports when applying for loans to buy or refinance their home, they own their appraisal.

Fact: Unless a lender releases its interest in the appraisal report, it is legally owned by the lending company that ordered the appraisal. However, consumers have to be given a copy of the appraisal upon written request, because of the Equal Credit Opportunity Act.

Myth: Home buyers need not worry about what is in their document so long as it satisfies the needs of their lending company.

Fact: A home buyer should definitely look through their appraisal report; there might be some questions or some concerns with the accuracy of the inspection that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes a valuable record for future reference, containing 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 vicinity.

Myth: Appraisers are hired only to estimate house values in property sales involving mortgage-lending deals.

Fact: Hiring an appraiser can fulfill a variety of requirements depending on the designations and certifications of the appraiser involved; appraisers can provide a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.

Myth: You don't need to get an appraisal if you get a home inspection.

Fact: An appraisal does not fulfill the same purpose as an inspection. The appraiser decides upon an opinion of value in the appraisal process and resulting document. House inspectors will create a report that will express the condition of the home and its major components and possible damage.