Myth: Assessed value should be similar to market value.
Reality: While most states back the idea that assessed value equates estimated market value, this generally is not the case. Interior remodeling that the assessor is not aware of and a dearth of reassessment on nearby houses are prime examples of why the price can vary.
Myth: The buyer or the seller will have impact in the value of the house depending upon for whom the appraiser is working.
Reality: There is no real interest on the part of the appraiser in the result of the analysis, therefore he will conduct his work with impartiality and independence, regardless of for whom the appraisal is conducted.
Myth: Any time market value is established, it should match the replacement cost of the property.
Reality: 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 property. The dollar amount needed to reconstruct a house is what forms the replacement cost.
Myth: Appraisers use a calculation, such as a specific price per square foot, to arrive at the value of a property.
Reality: There are many differing methods that an appraiser will use to make an in-depth investigation of every factor in consideration of the home, such as the size, location, condition, how close it is to specific facilities and the sales prices of recently sold comparable properties.
Myth: As houses appreciate by a specific percentage - in a robust economy - the properties within the same neighborhood are expected to increase by the same amount.
Reality: Any value an appraiser reports in regards to a certain property is always individualized, based on certain factors derived from the information of comparable properties and other considerations within the house itself. It makes no difference if the economy is strong or bad.
Myth: The home's outside is determinate of the expected price of the property; it is unnecessary to do an interior inspection.
Reality: To conclude a definite value beyond all doubt, an appraiser must assess the property on a variety of factors based on location, condition, improvements, amenities, and market trends. Obviously, none of these factors can be found just by examining the home from the exterior.
Myth: Because consumers fund appraisal reports when applying for loans to purchase or refinance their property, they own their appraisal.
Reality: Unless a lender releases its interest in the report, it is legally owned by the lending agency that purchased the appraisal. Home buyers have to be supplied with a version of the report upon written request due to the Equal Credit Opportunity Act.
Myth: There's no point for consumers to even worry about what the appraisal report contains so long as their lending agency is fine with the contents therein.
Reality: It is very important for home buyers to peruse a copy of their appraisal so that they can verify the accuracy of the document, in case they need to question its accuracy. 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, filled with useful and often-revealing information - 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 home needs its value estimated in a lender sales transaction.
Reality: Appraisers can have many different qualifications and designations which allow them to provide a series 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: A home inspection serves the same purpose as an appraisal.
Reality: An appraisal report does not serve the same purpose as an inspection. The appraiser forms an opinion of value in the appraisal process and resulting document. House inspectors will compose a report that will express the condition of the house and its major components and possible damage.
