Appraisal myths & facts
It is mandated by legal agencies that an appraiser is required to be state-licensed to produce appraisal reports for federally-related real estate sales in North Carolina. Also by law, you are entitled to receive a copy of the finished appraisal report from your lender. Contact James Earp Appraisal Service if you have any concerns about the appraisal process.
Myth: The value that is assessed by the appraiser will be the same as the market value.
Fact: This is not often the case; most states do support the concept that the assessed value is the same as market value, but not always. Interior remodeling that the assessor is unaware of and a lack of reassessment on nearby houses are excellent examples of why this occurs.
Myth: The buyer or the seller will have some pull in the value of the home depending upon for whom the appraiser is working.
Fact: The price of the property does not affect the payment of the appraiser; as such, the appraiser has no preconceived interest in the opinion of value of the property. This means that he will provide job with impartiality and independence regardless for whom the appraisal is conducted.
Myth: Market value will be the same as replacement cost.
Fact: Market value is derived from what a willing buyer would likely pay a willing seller for a specific property, with neither being under undue influence to buy or sell. If the house were reconstructed, the dollar amount needed to do so would make up the replacement cost.
Myth: Specific formulae, such as the price per square foot of the property, are the ways appraisers use to determine the worth of a property.
Fact: Appraisers complete a full analysis of all factors pertaining to the price of a house, including its location, condition, size, proximity to facilities and recent sale prices of comparable properties.
Myth: When the economy is on the rise and the cost of properties are found to be increasing by a certain percentage, the other houses in the proximity can be expected to rise based on that same percentage.
Fact: All increase of worth is on a one-on-one basis, determined by information on relevant conditions and the data of comparable properties. It makes no difference if the economy is powerful or on the decline.
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Myth: You can often see what a property is worth simply by looking at the exterior.
Fact: There are a number of different variables that show property value; these factors include location, condition, improvements, amenities, and market trends. An outside-only inspection definitely can't provide all of the data necessary.
Myth: Because consumers fund appraisals when applying for loans to purchase or refinance their house, they legally own their appraisal report.
Fact: Legally, the document is owned by the lending agency unless the lender releases their interest in the appraisal. Home buyers must be supplied with a version of the report upon written request because of the Equal Credit Opportunity Act.
Myth: It doesn't concern consumers what's in the appraisal report so long as it satisfies the needs of their lender.
Fact: Only if consumers look at a copy of their appraisal can they double-check its accuracy and possibly need to question the result. 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: Appraisers are hired only to estimate building values in house sales involving mortgage-lending transactions.
Fact: Appraisers can have many varied qualifications and designations which allow them to perform a variety of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: An appraisal report is no different than a home inspection.
Fact: A home inspection report serves a completely different purpose than an appraisal report. The purpose of the appraiser is to form an opinion of value in the appraisal process and through writing the report. The point of a home inspector is to find the condition of the house and its major components, then write a report on their inspection.