Myth: Market value needs to be the same as the assessed value of the property.
Reality: While most states uphold the idea that assessed value equates estimated market value, this usually is not the case.
Interior remodeling that the assessor has not investigated and a lack of reassessment on nearby houses are prime examples of why there might be a differential in price.
Myth: The opinion of value of a property will change depending upon whether the appraisal is ordered for the buyer or the seller.
Reality: The appraised value of the property does not affect the payment of the appraiser; as a result, the appraiser has no preconceived interest in the value of the home. Obviously, he will complete his job with impartiality and objectivity regardless of for whom the appraisal is provided.
Myth: Market value should mirror replacement cost.
Reality: Market value is found by what a willing buyer would be interested in paying a willing seller for a specific house, with neither being under duress to buy or sell.
If the property were reconstructed, the dollar amount required to do so would form the replacement cost.
Myth: Appraisers use a calculation, like a specific price per square foot, to come to the value of a home.
Reality: There are many numerous processes that an appraiser will use to make a full analysis of every factor pertaining to the property, such as the size, location, condition, how close it is to specific facilities and the values of recently sold comparable homes.
Myth: In a powerful economy - when the sales prices of homes in a given region are found to be appreciating by a particular percentage - the prices of individual homes in the area can be expected to increase by that same percentage.
Reality: Any value an appraiser reports concerning a certain property is always personalized, based on certain factors derived from the data of comparable properties and other specifications within the house itself.
It makes no difference whether the economy is good or on the decline.
Myth: You can usually see what a home is worth simply by looking at the outside.
Reality: To determine a definite value beyond all doubt, an appraiser must inspect the property on a variety of factors based on area, condition, improvements, amenities, and current market trends.
There's no real way to get all of this data from simply looking at the property from the outside.
Myth: Since you're the one coughing up the cash for the appraisal report when applying for the loan to buy or refinance real estate, you own the produced appraisal report.
Reality: Unless a lending agency releases its interest in the report, it is legally owned by the lending agency that purchased the appraisal.
Because of the Equal Credit Opportunity Act, any consumer requesting a copy of the report must be given it by their lender.
Myth: Home buyers need not be concerned with what is in their appraisal so long as it exceeds the needs of their lending group.
Reality: A home buyer should definitely look through their appraisal report; there may be some questions or some concerns about the accuracy of the analysis that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make.
An appraisal report can double as a record for the future, containing an exorbitant amount 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 vicinity.
Myth: The only reason someone would order an appraisal is if a property needs its value estimated in a lender-based sales transaction.
Reality: Based upon their qualifications and designations, appraisers can and often do provide a lot of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: You don't need to get an appraisal if you get a home inspection.
Reality: A home inspection report has a completely different purpose than an appraisal report.
The purpose of the appraiser is to form an opinion of value in the appraisal process and through creating the report.
A home inspector analyzes the condition of the house and its major components and reports these findings.
