Myth: The value that is assessed by the appraiser must be exactly the same as the market value.
Reality: While most states back the concept that assessed value equates estimated market value, this generally is not the case.
Interior reconstruction that the assessor is unaware of and a dearth of reassessment on nearby houses are perfect examples of why the price can vary.
Myth: The buyer or the seller often will have an influence in the value of the house depending upon for whom the appraiser is working.
Reality: The appraised value of the property does not affect the payment of the appraiser; due to this, the appraiser has no personal interest in the value of the property. Obviously, he will provide business with impartiality and objectivity regardless of for whom the appraisal is created.
Myth: The replacement cost of the home will be on par with the market value.
Reality: The way market value is arrived at is based on what a buyer would likely pay a willing seller for a home without being under duress from any external group to purchase or sell.
The dollar amount needed to reconstruct a property is what shows the replacement cost.
Myth: Specific formulae, like the price per square foot, are what appraisers use to ascertain the value of a house.
Reality: Appraisers complete an exhaustive analysis of all factors pertaining to the value of a house, 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 houses are reported to be increasing by a certain percentage, the other homes in the vicinity can be expected to rise based on that same percentage.
Reality: Any value an appraiser reports in regards to a particular home is always individualized, based on certain factors derived from the information of comparable houses and other specifications within the house itself.
It makes no difference whether the economy is strong or on the decline.
Myth: The property's exterior is determinate of the expected price of the home; it is unnecessary to do an interior inspection.
Reality: To find a concrete value beyond all doubt, an appraiser must assess the house on a variety of factors based on location, condition, improvements, amenities, and current market trends.
An outside-only inspection obviously can't provide all of the data needed.
Myth: Because consumers pay for appraisal reports when applying for loans to buy or refinance real estate, they legally own their appraisal report.
Reality: Legally, the appraisal is owned by the lender unless the lender releases their interest in the document.
Because of the Equal Credit Opportunity Act, any consumer asking for a copy of the report must be given it by their lending agency.
Myth: There's no need for consumers to even care about what the appraisal contains so long as their lending company is satisfied.
Reality: Only when home buyers check out a copy of their appraisal report can they verify its accuracy and know if they should ask questions. Remember, this is probably the most expensive and important investment a consumer will ever make.
Also, the report makes a valuable record for future reference, containing useful and often-revealing 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: Appraisals are ordered only to assess home values in house sales involving mortgage-lending transactions.
Reality: Appraisers can have many varied qualifications and designations which allow them to provide a series 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: There's no need to get an appraisal if you order a home inspection.
Reality: A home inspection report has a completely different purpose than an appraisal.
The job of the appraiser is to form an opinion of value in the appraisal process and through producing the report.
House inspectors will produce a report that will express the condition of the home and its major components and possible damage.