Myth: The value that is ascertained by the appraiser should be the same as the market value.
Reality: While most states uphold the concept that assessed value approximates estimated market value, this often is not the case. Sometimes when interior remodeling has occurred and the assessor is unaware of the improvement or other homes in the neighborhood have not been reassessed for years or more, it may vary widely.
Myth: Depending on whether the appraisal is drawn up for the buyer or the seller, the appraised value of the property will vary.
Reality: There is no vested interest on the part of the appraiser in the result of the appraisal, therefore he will complete his work with impartiality and independence, no matter of for whom the appraisal is ordered.
Myth: The replacement value of the house is always in line with the market value.
Reality: Without any influence from any external parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a particular house. If the home were rebuilt, the dollar amount necessary to do so would form the replacement cost.
Myth: There are certain ways that appraisers use to determine the opinion of value of a house, like the price per square foot.
Reality: Appraisers make a comprehensive analysis of all factors pertaining to the value of a property, including its location, condition, size, proximity to facilities and recent sale prices of comparable houses.
Myth: As homes increase in value by a specific percentage - in a strong economic state - the houses around the appreciating properties are expected to appreciate by the same amount.
Reality: An increase in value of a specific house is always determined on an individualized basis, factoring in data on comparable properties and other relevant specifications within the home itself. It makes no difference whether the economy is powerful or terrible.
Myth: Just looking at what the house looks like on its exterior gives an excellent idea of its value.
Reality: To determine a conclusive value beyond all doubt, an appraiser must assess the home on a variety of factors based on location, condition, improvements, amenities, and current market trends. Obviously, none of these variables can be derived just by inspecting the house from the exterior.
Myth: Because consumers fund appraisals when applying for loans to purchase or refinance their property, they own their appraisal report.
Reality: Legally, the appraisal report is owned by the lender unless the lender relinquishes their interest in the document. Under the Equal Credit Opportunity Act, any consumer requesting a copy of the report must be provided with one by their lending company.
Myth: Home buyers need not care about what is in their report so long as it exceeds the necessities of their lending agency.
Reality: It is a very good idea for home buyers to go through a copy of their appraisal report so that they can double-check 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, as it contains an incredible amount of information - 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 vicinity.
Myth: There is no reason to order an appraisal unless you are trying to get an estimate of the value of a house during a sales transaction involving a lending company.
Reality: Ordering an appraisal can fulfill a variety of wants 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: A house inspection serves the same purpose as an appraisal.
Reality: Appraisal reports are completely different than a home inspection report. The task of the appraiser is to conclude an opinion of value in the appraisal process and through creating the report. The purpose of a home inspector is to approximate the condition of the home and its major components, then compose a report on their findings.
