Myth: Assessed value should always be similar to market value.
Reality: While most states uphold the concept that assessed value is equal to estimated market value, this commonly is not the case.
Interior remodeling that the assessor is unaware of and a dearth of reassessment on nearby houses are prime examples of why this occurs.
Myth: Depending on if the appraisal is written for the buyer or the seller, the cost of the property will vary.
Reality: There is no vested interest on the part of the appraiser in the outcome of the appraisal, therefore he will conduct his work with impartiality and independence, regardless of for whom the appraisal is written.
Myth: Market value will mirror replacement cost.
Reality: Market value is arrived at through what a willing buyer would be interested in paying a willing seller for a specific home, with neither being under duress to buy or sell.
If the house were rebuilt, the dollar amount required to do so would make up the replacement cost.
Myth: Certain methods, such as the price per square foot of the property, are the ways appraisers use to come to the value of a house.
Reality: There are many different formulae that an appraiser will use to make a full analysis of every factor pertaining to the home, such as the size, location, condition, how close it is to specific facilities and the values of recently sold comparable houses.
Myth: As houses increase in value by a certain percentage - in a strong economy - the homes nearby are figured to appreciate by the same amount.
Reality: An increase in value of a specific property has to be determined on a case-by-case basis, factoring in data on comparable houses and other relevant elements.
It doesn't matter if the economy is doing well or declining.
Myth: The property's exterior is determinate of the actual value of the property; there is no need to do an interior inspection.
Reality: House value is determined by a number of factors, including location, condition, improvements, amenities, and market trends.
As you can see, none of these things can be found just by inspecting the property from the exterior.
Myth: Since the consumer is the one who provides the capital to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.
Reality: The appraisal report is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the appraisal.
Under the Equal Credit Opportunity Act, any home buyer asking for a copy of the document must be given it by their lending agency.
Myth: It doesn't matter to consumers what's in the report so long as it meets the needs of their lender.
Reality: Only when consumers read 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.
There is a great deal of information stored in an appraisal report that will probably be useful to the home buyer in the future, such as 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 region.
Myth: Appraisers are hired only to estimate building values in home sales involving mortgage-lending transactions.
Reality: Hiring an appraiser 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: A property inspection serves the same purpose as an appraisal.
Reality: Appraisal reports have almost nothing in common with a home inspection report.
An appraiser forms an opinion of value in the appraisal process and resulting document.
A home inspector assesses the condition of the property and its major components and reports these findings.
