Myth: Assessed value should always be similar to market value.
Reality: This usually isn't true; most states do support the idea that the assessed value is the same as market value, but not always. Usually when interior remodeling has occurred and the assessor is has not investigated the improvement or properties in the area have not been reassessed for quite some time, it may vary widely.
Myth: The buyer or the seller may have an influence in the value of the property depending upon for whom the appraiser is working.
Reality: The appraised value of the home does not affect the payment of the appraiser; due to this, the appraiser has no personal interest in the opinion of value of the house. This means that he will conduct business with impartiality and independence regardless of for whom the appraisal is conducted.
Myth: Market value will be the same as replacement cost.
Reality: Market value is based on what a willing buyer would be interested in paying a willing seller for a certain property, with neither being under undue influence to buy or sell. The replacement cost is the dollar amount required to reconstruct a home in-kind.
Myth: There are certain ways that real estate appraisers use to determine the opinion of value of a house, such as the price per square foot.
Reality: There are many numerous formulae that an appraiser will use to make a comprehensive analysis of every factor pertaining to the property, such as the size, location, condition, how close it is to specific facilities and the sales prices of recently sold comparable houses.
Myth: As homes appreciate by a certain percentage - in a robust economic state - the houses within the same neighborhood are expected to appreciate by the same amount.
Reality: Any value an appraiser reports concerning a certain home is always individualized, based on certain factors derived from the data of comparable homes and other considerations within the property itself. It doesn't matter if the economy is on the rise or declining.
Myth: You can usually find what a property is worth simply by looking at the exterior.
Reality: To determine an accurate value beyond all doubt, an appraiser must inspect the home on a variety of factors based on area, condition, improvements, amenities, and market trends. An outside-only inspection obviously can't provide all of the information needed.
Myth: Because consumers fund appraisals when applying for loans to buy or refinance their home, they legally own their appraisal report.
Reality: Legally, the appraisal is owned by the lending company unless the lender relinquishes their interest in the appraisal. However, home buyers must be provided with a copy of the report upon written request, through the Equal Credit Opportunity Act.
Myth: There's no reason for home buyers to even care about what the appraisal contains so long as their lending agency is fine with the contents therein.
Reality: A home buyer should definitely read through their report; there may be some questions or some worries with the accuracy of the appraisal report that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes an invaluable record for future reference, containing helpful 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 area.
Myth: Appraisals are ordered only to estimate real estate property values in property sales involving mortgage-lending transactions.
Reality: Ordering an appraisal can fulfill a variety of necessities depending on the designations and certifications of the appraiser involved; appraisers can perform a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: There's no need to get an appraisal if you order a home inspection.
Reality: A home inspection report serves a completely different purpose than an appraisal. The purpose of an appraisal is to find an opinion of market value during the appraisal process and the production of the report. The task of a home inspector is to approximate the condition of the property and its major components, then provide a report on their findings.