Appraisal myths debunked
It is mandated by the government that a real estate appraiser needs to be state-licensed to perform appraisal reports for federally-supported property transactions in Arizona. The law allows you to get a copy of your completed report from your lender after it has been produced. Contact us if you have any questions about the appraisal procedure.
Myth: Assessed value will always equate to market value.
Fact: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always. Interior remodeling that the assessor is unaware of and a lack of reassessment on nearby properties are perfect examples of why this occurs.
Myth: Depending on whether the appraisal is produced for the buyer or the seller, the appraised value of the home will vary.
Fact: The appraiser has no vested interest in the result of the appraisal report and should render services with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Market value should equal replacement cost.
Fact: Without any influence from any external parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a particular house. The dollar amount required to reconstruct a house is what shows the replacement cost.
Myth: Appraisers use a formula, such as a certain price per square foot, to arrive at the value of a property.
Fact: There are many differing processes that an appraiser will use to make a comprehensive analysis of every factor pertaining to the house, such as the size, location, condition, how close it is to undesirable facilities and the sales price of recently sold comparable houses.
Myth: In a strong economy - when the values of homes in a given neighborhood are reported to be appreciating by a certain percentage - the costs of individual houses in the vicinity can be expected to rise by that same percentage.
Fact: Value appreciation of a certain property is always concluded on an individualized basis, factoring in information on comparable homes and other relevant considerations. It makes no difference if the economy is excellent or terrible.
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Myth: Just looking at what the property looks like on the outside gives an excellent idea of its value.
Fact: There are a number of different variables that determine the value of a home; these factors include location, condition, improvements, amenities, and market trends. As you can see, none of these factors can be derived simply by examining the house from the exterior.
Myth: Because the consumer is the person who provides the money to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal report is theirs.
Fact: The report is, in fact, legally owned by the lending agency - unless the lender "relinquishes its interest" in the appraisal. Because of the Equal Credit Opportunity Act, any consumer demanding a copy of the document must be given it by their lending agency.
Myth: It doesn't mean anything to consumers what's in the appraisal so long as it meets the requirements of their lending agency.
Fact: A home buyer should definitely read through their report; there could be some questions or some concerns with the accuracy of the analysis that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of information stored in an report that could be useful to the consumer 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 area.
Myth: There is no reason to hire an appraiser unless you are trying to get an estimate of the worth of a property during a sales transaction involving a lending company.
Fact: Hiring an appraiser can fulfill a variety of requirements depending on the designations and certifications of the appraiser involved; appraisers can provide a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: You don't need to get an appraisal if you have had a home inspection.
Fact: A home inspection report has a completely different purpose than an appraisal report. The job of the appraiser is to find an opinion of value in the appraisal process and through producing the report. House inspectors will create a report that will explain the condition of the house and its major components and possible damage.