Appraisal myths debunked
Legally, a real estate appraiser needs to be state certified to perform legitimate real estate appraisals for federally-supported transactions. The law allows you to get a copy of your completed appraisal report from your lending agency after it has been produced. Contact WalshStreet Appraisals if you have any concerns about the appraisal procedure.
Myth: Market value will always be similar to the assessed value of the property.
Fact: While most states support the suggestion that assessed value approximates estimated market value, this generally is not the case. At times when interior remodeling has been done and the assessor is unaware of the improvement or other houses in the area have not been reassessed for quite a while, it may vary wildly.
Myth: The opinion of value of a home will change depending upon whether the appraisal is ordered for the buyer or the seller.
Fact: The appraiser has no personal interest in the outcome of the appraisal and should complete his job with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: The replacement value of the house will be is on par with the market value.
Fact: The way market value is derived is based on what a buyer would likely pay a willing seller for a property without being under pressure from any external party to buy or sell. The dollar amount necessary to reconstruct a property is what shows the replacement cost.
Myth: Specific methods, such as the price per square foot of the property, are the ways appraisers use to determine the worth of a property.
Fact: Appraisers make a detailed analysis of all factors pertaining to the cost of a home, 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 increasing by a certain percentage, the other homes in the proximity can be expected to increase based on that same percentage.
Fact: All appreciation of value is on a case-by-case basis, found by data on relevant conditions and the data of comparable houses. It makes no difference whether the economy is powerful or on the decline.
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Myth: You can often tell what a home is worth simply by looking at the outside.
Fact: There are a multitude of different variables that conclude the value of a home; these factors include area, condition, improvements, amenities, and market trends. An exterior inspection certainly can't provide all of the data needed.
Myth: Because consumers pay for appraisal reports when applying for loans to purchase or refinance real estate, they legally own their appraisal.
Fact: Unless a lending agency releases its vestment in the report, it is legally owned by the lending agency that purchased the appraisal. Due the Equal Credit Opportunity Act, any home buyer asking for a copy of the report must be given one by their lender.
Myth: There's no reason for home buyers to even concern themselves with what the appraisal report contains so long as their lending institution is fine with the contents therein.
Fact: A home buyer should definitely inspect their report; there may be some questions or some concerns with the accuracy of the inspection that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can serve as a record for the future, containing a great deal of information - 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 area.
Myth: There is no reason to hire an appraiser unless you are trying to get an estimate of the value of a house during a sales transaction involving a lending company.
Fact: Depending upon their qualifications and designations, appraisers can and will perform a variety of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A house inspection serves the same purpose as an appraisal.
Fact: Appraisal reports are definitely not the same as a home inspection report. The purpose of the appraiser is to find an opinion of value in the appraisal process and through producing the report. A home inspector analyzes the condition of the house and its major components and reports their findings.