Appraisal myths debunked
By law, an appraiser is required to be state-licensed to produce appraisals for federally-backed sales. You have the ability to receive a copy of the completed appraisal report from your lender. Contact our professional staff if you have any concerns about the appraisal process.
Myth: Market value must be the same as the assessed value of the property.
Fact: It could be that California, like most states, supports the idea that the assessed value equates to the market value; however, this is sometimes the exception rather than the rule. Examples include when interior reconstruction has happened and the assessor is unaware of the improvements, or when homes in the vicinity have not been reassessed for an prolonged period.
Myth: The buyer or the seller may have leverage in the value of the home depending upon for whom the appraiser is working.
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 written.
Myth: Market value will equate to replacement cost.
Fact: Without any pressure from any different parties to buy or sell, market value is what a willing buyer would pay an interested seller for a particular property. Replacement cost is the dollar amount needed to rebuild a house in-kind.
Myth: There are certain ways that appraisers use to determine the value of a home, like the price per square foot.
Fact: Appraisers make a detailed analysis of all factors in consideration to the price of a house, including its location, condition, size, proximity to facilities and recent worth of comparable properties.
Myth: When the economy is robust and the worth of houses are reported to be appreciating by a certain percentage, the other properties in the area can be expected to rise based on that same percentage.
Fact: Value appreciation of a specific property has to be determined on a case-by-case basis, factoring in information on comparable homes and other relevant elements. It makes no difference whether the economy is good or bad.
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Myth: The house's outside is determinate of the actual worth of the house; it is unnecessary to do an interior inspection.
Fact: To determine an accurate worth beyond all doubt, an appraiser must examine the house on a variety of factors based on area, condition, improvements, amenities, and current market trends. Obviously, none of these variables can be found just by examining the property from the outside.
Myth: Considering that the consumer is the one who provides the money to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.
Fact: Unless a lender releases its interest in the document, it is legally owned by the lending company that ordered the appraisal. Home buyers must be supplied with a copy of the report upon written request due to the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the appraisal so long as it meets the needs of their lender.
Fact: It is almost imperative for home buyers to look at a copy of their appraisal 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 report can serve as a record for the future, containing a great deal of data - including, but certainly 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 vicinity.
Myth: Appraisers are hired only to estimate house values in property sales involving mortgage-lending deals.
Fact: Appraisers can have many varied qualifications and designations which allow them to perform a lot of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: An appraisal report is no different than a home inspection.
Fact: Appraisal reports are definitely not the same as a home inspection. The appraiser concludes on an opinion of value in the appraisal process and resulting appraisal. House inspectors will write a report that will show the condition of the house and its major components and possible damage.