Myth: The value that is ascertained by the appraiser must be exactly the same as the market value.
Reality: While most states uphold the idea that assessed value equates estimated market value, this generally is not the case.
Examples include when interior remodeling has happened and the assessor is unaware of the improvements, or when homes in the area have not been reassessed for an extended period of time.
Myth: Depending on if the appraisal is written for the buyer or the seller, the cost of the house will vary.
Reality: There is no vested interest on the part of the appraiser in the outcome of the report, therefore he will complete his work with impartiality and independence, despite of for whom the appraisal is created.
Myth: Any time market value is determined, it should match the replacement cost of the house.
Reality: Without any influence from any different parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a particular house.
The dollar amount demanded to reconstruct a home is what forms the replacement cost.
Myth: There are certain methods that real estate appraisers use to determine the opinion of value of a property, such as the price per square foot.
Reality: There are many different formulae that an appraiser will use to make a full investigation of every factor in consideration of the house, such as the size, location, condition, how close it is to certain facilities and the sales prices of recently sold comparable properties.
Myth: In a powerful economy - when the sales prices of homes in a given area are reported to be increasing by a certain percentage - the prices of individual houses in the proximity can be expected to appreciate by that same percentage.
Reality: All appreciation of value is on a case-by-case basis, determined by information on relevant conditions and the data of comparable houses.
It makes no difference whether the economy is good or terrible.
Myth: You can commonly see what a property is worth simply by looking at the exterior.
Reality: To determine an accurate value beyond all doubt, an appraiser must examine the home on a variety of factors based on area, condition, improvements, amenities, and market trends.
There's no possible way to get all of this data from simply viewing the house from the exterior.
Myth: Since you're the one coughing up the cash for the appraisal report when applying for your loan to purchase or refinance real estate, you own the ordered appraisal report.
Reality: The appraisal report is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the appraisal report.
Home buyers must be given a copy of the report through request as per the Equal Credit Opportunity Act.
Myth: There's no reason for consumers to even care about what the report contains so long as their lending institution is fine with the contents therein.
Reality: A consumer should definitely read through their appraisal report; there will probably be some questions or some concerns about the accuracy of the analysis that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make.
An report can serve as a record for the future, since it contains a great deal of information - including, but 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: The only reason someone would hire an appraiser is if a property needs its value estimated in a lender-based sales transaction.
Reality: Hiring an appraiser can fulfill a variety of needs depending on the designations and certifications of the appraiser involved; appraisers can provide a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: A home inspection serves the same purpose as an appraisal.
Reality: A home inspection report has a completely different purpose than an appraisal report.
The reason behind an appraisal report is to conclude upon an opinion of market value during the appraisal process and the production of the appraisal report.
A home inspector determines the condition of the house and its main components and reports these findings.
