Myth: The value that is ascertained by the appraiser is required to be the same as the market value.
Reality: While most states uphold the suggestion that assessed value is the same as estimated market value, this often is not the case.
Examples include when interior reconstruction has occurred and the assessor is unaware of the improvements, or when homes in the area have not been reassessed for an prolonged period of time.
Myth: The buyer or the seller will have an influence in the value of the property depending upon for whom the appraiser is working.
Reality: The opinion of value of the home does not affect the pay of the appraiser; because of this, the appraiser has no pressured interest in the opinion of value of the house. Obviously, he will complete his business with impartiality and independence regardless of for whom the appraisal is provided.
Myth: Any time market value is established, it should equal the replacement cost of the property.
Reality: Market value is found by what a willing buyer would likely pay a willing seller for a particular house, with neither being under undue influence to buy or sell.
If the home were reconstructed, the dollar amount required to do so would be the replacement cost.
Myth: Specific methods, such as the price per square foot of the property, are the ways appraisers use to determine the value of a home.
Reality: There are many differing calculations that an appraiser will use to make a comprehensive investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to undesirable facilities and the sales prices of recently sold comparable properties.
Myth: As houses increase in value by a certain percentage - in a strong economy - the properties around the appreciating properties are figured to increase by the same amount.
Reality: The appreciation of a specific house is always determined on an individualized basis, factoring in information on comparable properties and other relevant specifications within the home itself.
It doesn't matter if the economy is doing well or declining.
Myth: You can commonly find what a property is worth simply by looking at the exterior.
Reality: To determine a solid value beyond all doubt, an appraiser must examine the home on a variety of factors based on area, condition, improvements, amenities, and market trends.
As you can see, none of these things can be found just by looking at the home from the exterior.
Myth: Since you're the one funding for the appraisal when applying for your loan to purchase or refinance your home, you own the provided appraisal.
Reality: Legally, the appraisal report is owned by the lending company unless the lender releases their interest in the report.
However, home buyers have to be provided with a copy of the report upon written request, because of the Equal Credit Opportunity Act.
Myth: There's no reason for consumers to even concern themselves with what the appraisal report contains so long as their lending company is fine with the contents therein.
Reality: A consumer should definitely read through their appraisal; there will probably be some questions or some worries about 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.
There is a wealth of information stored in an appraisal that can be useful to the home buyer 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 estimate house values in house sales involving mortgage-lending deals.
Reality: Based upon their qualifications and designations, appraisers can and do provide a series of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A house inspection serves the same purpose as an appraisal.
Reality: An appraisal does not serve the same purpose as an inspection report.
The reason behind an appraisal is to find an opinion of market value during the appraisal process and the production of the appraisal.
The purpose of a home inspector is to determine the condition of the house and its major components, then write a report on these inspection.