Appraisal myths debunked

Legally, a real estate appraiser must be state certified to create legitimate real estate appraisals for federally-related purchase. Also by law, you have the right to request a copy of the finished report from your lender. Contact our professional staff if you have any concerns about the appraisal process.

Myth: Assessed value will always equate to market value.

Fact: It is probable that California, like most states, supports the suggestion that the assessed value is no different from the market value; however, this is sometimes the exception rather than the rule. Interior remodeling that the assessor is unaware of and a lack of reassessment on nearby properties are exact examples of why there might be a differential in price.

Myth: Depending on if the appraisal is ordered for the buyer or the seller, the cost of the property will vary.

Fact: There is no personal interest on the part of the appraiser in the result of the appraisal report, therefore he will complete his work with impartiality and independence, no matter for whom the appraisal is created.

Myth: Market value will equal replacement cost.

Fact: Market value is found by what a willing buyer would likely pay a willing seller for a certain home, with neither being under pressure to buy or sell. If the house were rebuilt, the dollar amount necessary to do so would form the replacement cost.

Myth: Specific methods, such as the price per square foot, are the ways appraisers use to ascertain the cost of a property.

Fact: Appraisers make a full analysis of all factors in consideration to the worth of a home, including its location, condition, size, proximity to facilities and recent values of comparable houses.

Myth: When the economy is on the rise and the sales prices of properties are reported to be appreciating by a certain percentage, the other homes in the neighborhood can be expected to rise based on that same percentage.

Fact: Any value at which an appraiser concludes concerning a particular home is always personalized, based on certain factors found from the information of comparable properties and other considerations within the house itself. It doesn't matter if the economy is doing well or declining.

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Myth: You can often find what a home is worth simply by looking at the outside.

Fact: To determine an accurate worth beyond all doubt, an appraiser must inspect the home on a variety of factors based on area, condition, improvements, amenities, and current market trends. As you can see, none of these factors can be found just by inspecting the property from the exterior.

Myth: Because the consumer is the person who provides the money to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal is theirs.

Fact: Legally, the appraisal is owned by the lending agency unless the lender relinquishes their interest in the appraisal. By the Equal Credit Opportunity Act, any consumer asking for a copy of the report must be provided with one by their lending agency.

Myth: Consumers need not be concerned with what is in their document so long as it meets the requirements of their lending company.

Fact: Only if home buyers read a copy of their report can they verify its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes a near perfect record for future reference, comprised of useful and often-revealing information - including 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: There is no reason to order an appraisal unless you are trying to get an assessment of the cost of a house during a sales transaction involving a lender.

Fact: Hiring an appraiser can fulfill a variety of needs depending on the designations and certifications of the appraiser involved; appraisers can provide a great deal of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.

Myth: An appraisal report is the same as a home inspection report.

Fact: An appraisal report does not fulfill the same purpose as an inspection. The function of an appraisal report is to arrive at an opinion of fair market value during the appraisal process and the production of the report. The task of a home inspector is to determine the condition of the property and its main components, then produce a report on these conclusions.