Appraisal myths debunked
By law, an appraiser must be state-licensed to produce appraisals for federally-supported purchases. Also by law, you are allowed to demand a copy of the finished appraisal from your lending agency. Contact our professional staff if you have any questions about the appraisal procedure.
Myth: Market value should be equivocal to the assessed value of the property.
Fact: This usually isn't true; most states do support the suggestion that the assessed value is the same as market value, but not always. Examples include when interior remodeling has happened and the assessor has not seen the improvements, or when properties in the area have not been reassessed for an extended period of time.
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.
Fact: The appraiser has no vested interest in the outcome of the report and should conduct his job with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Market value will be the same as replacement cost.
Fact: Without any pressure from any outside parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a particular home. Replacement value is the dollar amount needed to rebuild a property in-kind.
Myth: Specific formulae, like the price per square foot of the property, are the methods appraisers use to come to the worth of a property.
Fact: Appraisers make a full analysis of all factors pertaining to the value of a house, including its location, condition, size, proximity to facilities and recent costs of comparable homes.
Myth: When the economy is on the rise and the cost of houses are reported to be rising by a certain percentage, the other homes in the proximity can be expected to appreciate based on that same percentage.
Fact: All appreciation of value is on an individual basis, determined by data on relevant conditions and the data of comparable houses. It doesn't matter if the economy is doing well or declining.
Have other questions about appraisers, appraising or real estate in Wake County or Raleigh, NC?Contact us
Myth: Just seeing what the home looks like on its exterior gives a good idea of its value.
Fact: Home worth is concluded by a number of variables, including location, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from just viewing the house from the exterior.
Myth: Since you're the one funding for the appraisal when applying for the loan to buy or refinance your house, you own the produced appraisal report.
Fact: The appraisal is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the report. Consumers have to be supplied with a copy of the document through request because of the Equal Credit Opportunity Act.
Myth: Consumers need not be concerned with what is in their report so long as it meets the requirements of their lending company.
Fact: A home buyer should definitely look through their document; there may be some questions or some worries with the accuracy of the appraisal that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can double as a record for the future, containing 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 area.
Myth: Appraisers are hired only to assess home values in property sales involving mortgage-lending transactions.
Fact: Based upon their qualifications and designations, appraisers can and do provide a multitude of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A house inspection serves the same purpose as an appraisal.
Fact: A home inspection serves a completely different purpose than an appraisal. The appraiser finds an opinion of value in the appraisal process and resulting appraisal. House inspectors will write a report that will show the condition of the house and its major components and possible damage.