Myth: Assessed value generally will be the same as market value.
Reality: While most states uphold the suggestion that assessed value approximates estimated market value, this often is not the case.
Interior remodeling that the assessor has not investigated and a dearth of reassessment on nearby houses are excellent examples of why this occurs.
Myth: Depending on if the appraisal is produced for the buyer or the seller, the value of the property will vary.
Reality: The value of the property does not affect the payment of the appraiser; due to this, the appraiser has no pressured interest in the value of the property. Obviously, he will provide job with impartiality and independence regardless of for whom the appraisal is provided.
Myth: Market value should mirror replacement cost.
Reality: The way market value is derived is based on what a home buyer would be willing to pay a willing seller for a house without being under duress from any outside party to purchase or sell.
If the home were reconstructed, the dollar amount required to do so would make up the replacement cost.
Myth: There are specific ways that appraisers use to show the cost of a property, such as the price per square foot.
Reality: Appraisers make a full 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 properties.
Myth: In a strong economy - when the prices of houses in a given neighborhood are reported to be rising by a particular percentage - the values of individual properties in the vicinity can be expected to appreciate by that same percentage.
Reality: Any value an appraiser derives in regards to a specific house is always individualized, based on certain factors pulled from the data of comparable houses and other considerations within the house itself.
It doesn't matter if the economy is on the rise or declining.
Myth: Just examining what the home looks like on the outside gives an idea of its value.
Reality: House value is determined by a multitude of variables, including location, condition, improvements, amenities, and market trends.
As you can see, none of these variables can be found just by viewing the home from the outside.
Myth: Since you're the one coughing up the cash for the appraisal when applying for your loan to purchase or refinance real estate, you own the produced appraisal report.
Reality: The appraisal report is, in fact, legally owned by the lender - unless the lender "releases its interest" in the document.
Because of the Equal Credit Opportunity Act, any consumer demanding a copy of the appraisal report must be given one by their lending company.
Myth: Home buyers need not be concerned with what is in their report so long as it meets the necessities of their lending institution.
Reality: A consumer should definitely look through their appraisal; there will probably be some questions or some concerns 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.
Also, the appraisal makes a valuable record for future reference, containing helpful 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 area.
Myth: The only reason someone would order an appraisal is if a house needs its value assessed in a lender-based sales transaction.
Reality: Based upon their qualifications and designations, appraisers can and will perform a multitude of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: You don't need to get an appraisal if you get a home inspection.
Reality: A home inspection serves a completely different purpose than an appraisal report.
The appraiser finds an opinion of value in the appraisal process and resulting report.
The point of a home inspector is to approximate the condition of the home and its major components, then produce a report on these findings.
