Myth: Market value needs to be the same as the assessed value of the property.
Reality: While most states back the idea that assessed value approximates estimated market value, this generally is not the case.
Interior remodeling that the assessor is unaware of and a dearth of reassessment on nearby properties are prime examples of why the price can vary.
Myth: The value of a property will be different depending upon whether the appraisal is ordered for the buyer or the seller.
Reality: The appraiser has no personal interest in the result of the report and should render services with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: The replacement value of the house should be on par with the market value.
Reality: Market value is acquired by what a willing buyer would be interested in paying a willing seller for a specific property, with neither being under duress to buy or sell.
Replacement value is the dollar amount required to reconstruct a house in-kind.
Myth: Specific formulae, like the price per square foot of the property, are what appraisers use to come to the value of a house.
Reality: Appraisers complete 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 homes.
Myth: When the economy is robust and the sales prices of properties are found to be appreciating by a certain percentage, the other houses in the area can be expected to increase based on that same percentage.
Reality: Any value an appraiser reports in regards to a certain house is always individualized, based on certain factors derived from the data of comparable houses and other specifications within the home itself.
This is true in excellent economic times as well as poor.
Myth: The home's outside is determinate of the actual value of the house; it is unnecessary to do an interior appraisal.
Reality: Home value is determined by a number of variables, including - but not limited to - area, condition, improvements, amenities, and market trends.
Obviously, none of these factors can be found simply by looking at the property from the exterior.
Myth: Because consumers pay for appraisal reports when applying for loans to purchase or refinance real estate, they own their appraisal.
Reality: Legally, the report is owned by the lending company unless the lender relinquishes their interest in the document.
Under the Equal Credit Opportunity Act, any consumer demanding a copy of the report must be provided with one by their lending company.
Myth: It doesn't matter to consumers what's in the report so long as it satisfies the needs of their lender.
Reality: A consumer should definitely look through their appraisal report; there could be some questions or some worries with the accuracy of the inspection that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make.
Also, the appraisal makes a near perfect record for future reference, comprised of useful and often-revealing data - including 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: Appraisals are ordered only to assess house values in house sales involving mortgage-lending deals.
Reality: Hiring an appraiser can fulfill a variety of requirements depending on the designations and certifications of the appraiser involved; appraisers can perform a great deal of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: A property inspection serves the same purpose as an appraisal.
Reality: Appraisal reports have almost nothing in common with a home inspection.
The appraiser concludes on an opinion of value in the appraisal process and resulting appraisal report.
The job of a home inspector is to determine the condition of the house and its main components, then compose a report on these findings.