Myth: Market value will be the same as the assessed value of the property.
Reality: This usually isn’t true; 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 occurred and the assessor has not seen the improvements, or when properties in the vicinity have not been reassessed for an extended time.
Myth: The buyer or the seller will have leverage in the cost of the house depending upon for whom the appraiser is working.
Reality: The price of the home does not affect the payment of the appraiser; because of this, the appraiser has no personal interest in the price of the home. What this means is he will complete his job with impartiality and independence regardless of for whom the appraisal is produced.
Myth: Any time market value is calculated, it should equal the replacement cost of the house.
Reality: The way market value is found is based on what a buyer would be willing to pay a willing seller for a property without being under duress from any external party to purchase or sell. Replacement value is the dollar amount required to reconstruct a home in-kind.
Myth: Certain formulae, like the price per square foot, are the ways appraisers use to ascertain the value of a house.
Reality: Appraisers make a comprehensive analysis of all factors pertaining to the value of a home, including its location, condition, size, proximity to facilities and recent sale prices of comparable homes.
Myth: As houses increase in value by a specific percentage – in a robust economic state – the houses in proximity are expected to appreciate by the same amount.
Reality: An increase in value of a certain property must be concluded on an individualized basis, factoring in data on comparable properties and other relevant specifications within the home itself. This is true in good economic times as well as poor.
Myth: The home’s outside is determinate of the expected price of the home; there is no need to do an interior inspection.
Reality: There are a multitude of different variables that determine the value of a home; these factors include area, condition, improvements, amenities, and market trends. Obviously, none of these factors can be derived just by looking at the home from the outside.
Myth: Considering that the consumer is the one who puts up the money to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal report is theirs.
Reality: The appraisal report is, in fact, legally owned by the lending company – unless the lender “releases its interest” in the appraisal. Home buyers must be provided with a copy of the document upon written request as per the Equal Credit Opportunity Act.
Myth: There’s no reason for home buyers to even care about what the appraisal contains so long as their lender is satisfied.
Reality: A consumer should definitely inspect their appraisal; there might be some questions or some worries about the accuracy of the analysis that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of information stored in an appraisal report that will probably 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 proximity.
Myth: Appraisals are ordered only to estimate house values in home sales involving mortgage-lending deals.
Reality: Appraisers can have many varied qualifications and designations which allow them to perform a multitude of different services including – but definitely not limited to – advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: You don’t have to get an appraisal if you have had a home inspection.
Reality: Appraisal reports are nothing like a home inspection. The job of the appraiser is to find an opinion of value in the appraisal process and through writing the report. A home inspector analyzes the condition of the building and its main components and reports these findings.