Myth: Market value needs to be equivocal to the assessed value of the property.
Reality: While most states uphold the concept that assessed value approximates estimated market value, this commonly is not the case. Examples include when interior remodeling has occurred and the assessor is unaware of the improvements, or when homes in the area have not been reassessed for an extended time.
Myth: The buyer or the seller will have impact in the cost of the house depending upon for whom the appraiser is working.
Reality: The price of the property does not affect the payment of the appraiser; as such, the appraiser has no personal interest in the value of the home. Obviously, he will complete his business with impartiality and objectivity regardless of for whom the appraisal is conducted.
Myth: The replacement cost of the house will be on par with the market value.
Reality: Without any suggestion from any different parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific home. The dollar amount necessary to rebuild a property is what constitutes the replacement cost.
Myth: Appraisers use a formula, like a specific price per square foot, to arrive at the value of a property.
Reality: Appraisers complete a comprehensive analysis of all factors pertaining to the value of a home, including its location, condition, size, proximity to facilities and recent sale prices of comparable homes.
Myth: As homes appreciate by a specific percentage - in a strong economic state - the homes nearby are figured to appreciate by the same amount.
Reality: An increase in value of a certain property is always determined on a case-by-case basis, factoring in information on comparable homes and other relevant elements. This is true in good economic times as well as poor.
Myth: Just looking at what the house looks like on its exterior gives an excellent idea of its value.
Reality: House value is concluded by a number of variables, including - but not limited to - area, condition, improvements, amenities, and market trends. As you can see, none of these things can be derived just by viewing the property from the exterior.
Myth: Since you're the one funding for the appraisal report when applying for the loan to buy or refinance your home, you own the ordered appraisal.
Reality: Unless a lender releases its vestment in the appraisal 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 document must be provided with it by their lending agency.
Myth: Home buyers need not be concerned with what is in their appraisal document so long as it exceeds the requirements of their lending group.
Reality: Only when home buyers look through 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. An report can double as a record for the future, since it contains an exorbitant amount of data - 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: Appraisers are hired only to assess building values in house sales involving mortgage-lending deals.
Reality: Appraisers can have many different qualifications and designations which allow them to perform a multitude of different services including - but not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: A property inspection serves the same purpose as an appraisal.
Reality: An appraisal does not fulfill the same purpose as an inspection report. The job of the appraiser is to find an opinion of value in the appraisal process and through creating the report. A home inspector analyzes the condition of the property and its major components and reports these findings.
