Myth: The value that is ascertained by the appraiser must be exactly the same as the market value.
Reality: While most states back the concept that assessed value is the same as estimated market value, this commonly is not the case.
Examples include when interior reconstruction has occurred and the assessor does not know about the improvements, or when properties in the area have not been reassessed for an extended period.
Myth: The buyer or the seller sometimes may have some pull in the cost of the house depending upon for whom the appraiser is working.
Reality: The opinion of value of the house does not affect the pay of the appraiser; due to this, the appraiser has no pressured interest in the value of the house. Obviously, he will render services with impartiality and objectivity regardless of for whom the appraisal is conducted.
Myth: Market value should be the same as replacement cost.
Reality: The way market value is derived is based on what a home buyer would be willing to pay a willing seller for a house without being under influence from any external group to buy or sell.
The dollar amount demanded to rebuild a home is what forms the replacement cost.
Myth: There are certain ways that appraisers use to show the opinion of value of a home, like the price per square foot.
Reality: Appraisers make an exhaustive 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: In a strong economy - when the values of houses in a given region are reported to be appreciating by a certain percentage - the prices of individual houses in the area can be expected to increase by that same percentage.
Reality: Any value an appraiser derives in regards to a specific home is always personalized, based on certain factors found from the data of comparable houses and other considerations within the home itself.
This is true in good economic times as well as poor.
Myth: Just examining what the home looks like on the outside gives an idea of its value.
Reality: There are a number of different factors that conclude the value of a home; these factors include location, condition, improvements, amenities, and market trends.
As you can see, none of these things can be derived simply by inspecting the home from the exterior.
Myth: Because consumers fund the appraisal when applying for loans to purchase or refinance their house, they own their appraisal report.
Reality: Unless a lending agency releases its interest in the appraisal report, it is legally owned by the lending agency that purchased the appraisal.
Because of the Equal Credit Opportunity Act, any home buyer requesting a copy of the document must be provided with it by their lender.
Myth: Consumers need not be concerned with what is in their appraisal so long as it satisfies the necessities of their lending agency.
Reality: Only when home buyers read a copy of their appraisal report can they double-check 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 appraisal report can serve 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 home needs its value estimated in a lender-based sales transaction.
Reality: Appraisers can have many varied qualifications and designations which allow them to provide a lot 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: You don't have to get an appraisal if you get a home inspection.
Reality: Appraisal reports are definitely not the same as a home inspection report.
An appraiser forms an opinion of value in the appraisal process and resulting appraisal report.
House inspectors will write a report that will show the condition of the property and its major components and possible damage.