Myth: The value that is assessed by the appraiser will be equivalent to the market value.
Reality: While most states back the suggestion that assessed value approximates estimated market value, this usually is not the case.
Examples include when interior reconstruction has happened and the assessor does not know about the improvements, or when homes in the vicinity have not been reassessed for an prolonged time.
Myth: Depending on if the appraisal is done for the buyer or the seller, the opinion of value of the property will vary.
Reality: The cost of the house does not affect the payment of the appraiser; as a result, the appraiser has no vested interest in the value of the home. This means that he will conduct task with impartiality and objectivity regardless of for whom the appraisal is created.
Myth: Market value should equal replacement cost.
Reality: The way market value is arrived at is based on what a buyer would likely pay a willing seller for a home without being under duress from any external party to purchase or sell.
The replacement cost is the dollar amount needed to rebuild a home in-kind.
Myth: Appraisers use a calculation, like a certain price per square foot, to figure out the value of a house.
Reality: There are many different processes that an appraiser will use to make a full investigation of every factor in consideration of the property, such as the size, location, condition, how close it is to specific facilities and the values of recently sold comparable properties.
Myth: In a robust economy - when the prices of properties in a given region are reported to be appreciating by a certain percentage - the prices of individual houses in the area can be expected to increase by that same percentage.
Reality: An increase in value of a specific home is always determined on a case-by-case basis, factoring in information on comparable houses and other relevant elements.
This is true in excellent economic times as well as poor.
Myth: The home's exterior is determinate of the expected price of the house; it is unnecessary to do an interior inspection.
Reality: To find a solid value beyond all doubt, an appraiser must inspect the home 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 simply inspecting the house from the outside.
Myth: Because consumers fund the appraisal when applying for loans to purchase or refinance real estate, they legally own their appraisal.
Reality: Unless a lender releases its vestment in the appraisal report, it is legally owned by the lending agency that ordered the appraisal.
Under the Equal Credit Opportunity Act, any home buyer demanding a copy of the document must be given one by their lending company.
Myth: It doesn't concern consumers what's in the appraisal report so long as it meets the needs of their lending agency.
Reality: It is very important for home buyers to check over a copy of their appraisal so that they can verify the accuracy of the document, in case they need to question its veracity. 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 region.
Myth: Appraisals are ordered only to estimate house values in property sales involving mortgage-lending transactions.
Reality: Appraisers can have many varied qualifications and designations which allow them to perform a multitude of different services including - but not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: There's no need to get an appraisal if you get a home inspection.
Reality: Appraisal reports are nothing like a home inspection report.
The job of the appraiser is to come to an opinion of value in the appraisal process and through writing the report.
A home inspector assesses the condition of the building and its main components and reports their findings.