Common myths about appraising

By law, an appraiser must be state-licensed to perform appraisals for federally-backed purchases. You have the ability to request a copy of the finished appraisal report from your lender. Contact All City Appraisal if you have any questions about the appraisal procedure.

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

Fact: While most states uphold the concept that assessed value approximates estimated market value, this commonly is not the case. Interior remodeling that the assessor has not investigated and a dearth of reassessment on nearby properties are excellent examples of why the price can vary.

Myth: Depending on whether the appraisal is done for the buyer or the seller, the cost of the home will vary.

Fact: There is no real interest on the part of the appraiser in the outcome of the report, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is conducted.

Myth: Market value will equal replacement cost.

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

Myth: Specific methods, such as the price per square foot, are the methods appraisers use to arrive at the cost of a house.

Fact: There are many varied methods that an appraiser will use to make a comprehensive investigation of every factor in consideration of the house, such as the size, location, condition, how close it is to specific facilities and the opinion of value of recently sold comparable properties.

Myth: In a robust economy - when the values of houses in a given neighborhood are reported to be rising by a certain percentage - the prices of individual houses in the area can be expected to increase by that same percentage.

Fact: Cost increase of a certain house is always determined on an individualized basis, factoring in information on comparable properties and other relevant specifications within the house itself. This is true in good economic times as well as bad.

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Myth: The property's exterior is determinate of the actual value of the home; there is no need to do an interior appraisal.

Fact: Home worth is determined by a multitude of factors, including area, condition, improvements, amenities, and market trends. There's no real way to get all of this data from simply looking at the house from the outside.

Myth: Because the consumer is the party who provides the capital to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal report belongs to them.

Fact: The document is, in fact, legally owned by the lending company - unless the lender "relinquishes its interest" in the appraisal. Consumers have to be given a version of the report upon written request because of the Equal Credit Opportunity Act.

Myth: It doesn't matter to consumers what's in the report so long as it satisfies the requirements of their lender.

Fact: It is a very good idea for home buyers to peruse a copy of their appraisal report so that they can verify the accuracy of the document, in case there is a need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can serve as a record for the future, as it contains a great deal of data - 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: Appraisers are hired only to estimate house values in property sales involving mortgage-lending deals.

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

Myth: An appraisal is no different than a home inspection report.

Fact: Appraisal reports have almost nothing in common with a home inspection. The appraiser decides upon an opinion of value in the appraisal process and resulting document. A home inspector assesses the condition of the home and its main components and reports these findings.