Common myths about appraising

By law, an appraiser must be state-licensed to perform appraisals for federally-supported purchases. Also by law, you are allowed to demand a copy of the completed appraisal from your lending agency. Contact All City Appraisal if you have any questions about the appraisal process.

Myth: The value that is ascertained by the appraiser should be equivalent to the market value.

Fact: While most states back the idea that assessed value approximates estimated market value, this usually is not the case. Generally when interior remodeling has been done and the assessor is has not investigated the improvement or other homes in the neighborhood have not been reassessed for quite a while, it may vary wildly.

Myth: The opinion of value of a house will be different depending upon if the appraisal is conducted for the buyer or the seller.

Fact: The appraiser has no vested interest in the result of the appraisal and should render his task with independence, objectivity and impartiality - no matter for whom the appraisal is provided.

Myth: The replacement cost of the property is always is on par with the market value.

Fact: The way market value is arrived at 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. The dollar amount required to rebuild a home is what shows the replacement cost.

Myth: Appraisers use a formula, such as a certain price per square foot, to conclude the cost of a property.

Fact: There are many numerous ways that an appraiser will use to make an in-depth investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to certain facilities and the opinion of value of recently sold comparable properties.

Myth: As houses appreciate by a certain percentage - in a strong economic state - the homes around the appreciating properties are figured to appreciate by the same amount.

Fact: Price increase of a certain property is always concluded on a case-by-case basis, factoring in information on comparable properties and other relevant elements. It makes no difference if the economy is good or on the decline.

Have other questions about appraisers, appraising or real estate in Los Angeles County or Woodland Hills, CA?

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Myth: The house's exterior is determinate of the actual value of the home; it is unnecessary to do an interior inspection.

Fact: To determine an accurate worth beyond all doubt, an appraiser must assess the property on a variety of factors based on location, condition, improvements, amenities, and market trends. An exterior inspection obviously can't provide all of the data needed.

Myth: Because consumers pay for appraisals when applying for loans to buy or refinance their home, they legally own their appraisal report.

Fact: The document is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the document. However, consumers must be provided with a copy of the document upon written request, through the Equal Credit Opportunity Act.

Myth: Consumers need not care about what is in their appraisal so long as it exceeds the needs of their lending group.

Fact: Only if home buyers check out a copy of their report can they double-check its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of data stored in an appraisal report that will probably 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 proximity.

Myth: There is no reason to order an appraisal unless you are trying to get an estimate of the price of a property during a sales transaction involving a lending agency.

Fact: Based upon their qualifications and designations, appraisers can and do perform a variety of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.

Myth: You shouldn't need to get an appraisal if you get a home inspection.

Fact: A home inspection report serves a completely different purpose than an appraisal report. The reason behind an appraisal report is to conclude upon an opinion of fair market value during the appraisal process and the production of the appraisal. A home inspector determines the condition of the property and its major components and reports their findings.