Appraisal myths & facts

By law, an appraiser must be state-licensed to produce appraisals for federally-related sales. You have the ability to receive a copy of the completed appraisal from your lender. Contact James Earp Appraisal Service if you have any concerns about the appraisal process.

Myth: Assessed value should always equate to market value.

Fact: While most states back the concept that assessed value approximates estimated market value, this usually is not the case. Examples include when interior reconstruction has happened and the assessor has not seen the improvements, or when houses in the area have not been reassessed for an prolonged time.

Myth: The opinion of value of a house will be different depending upon whether the appraisal is conducted for the buyer or the seller.

Fact: The opinion of value of the home does not affect the payment of the appraiser; because of this, the appraiser has no personal interest in the cost of the property. What this means is he will conduct services with impartiality and independence regardless for whom the appraisal is created.

Myth: Any time market value is established, it should be similar to the replacement cost of the home.

Fact: Market value is derived from what a willing buyer would likely pay a willing seller for a particular house, with neither being under pressure to buy or sell. The dollar amount necessary to rebuild a property is what shows the replacement cost.

Myth: Certain formulae, like the price per square foot, are the ways appraisers use to arrive at the worth of a property.

Fact: Appraisers complete an exhaustive analysis of all factors pertaining to the cost of a home, including its location, condition, size, proximity to facilities and recent costs of comparable properties.

Myth: When the economy is on the rise and the worth of houses are found to be increasing by a certain percentage, the other homes in the area can be expected to appreciate based on that same percentage.

Fact: All appreciation of price is on a case-by-case basis, concluded by data on relevant elements and the data of comparable properties. This is true in fair economic times as well as poor.

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Myth: The property's exterior is determinate of the actual price of the home; it is unnecessary to do an interior appraisal.

Fact: There are a number of different factors that determine property value; these factors include location, condition, improvements, amenities, and market trends. An exterior inspection obviously can't provide all of the data necessary.

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, legally the appraisal report is theirs.

Fact: Legally, the document is owned by the lender unless the lender relinquishes their interest in the report. However, consumers have to be provided with a copy of the appraisal upon written request, because of the Equal Credit Opportunity Act.

Myth: It doesn't mean anything to consumers what's in the report so long as it satisfies the needs of their lending company.

Fact: A consumer should definitely look through their appraisal report; there could be some questions or some worries about the accuracy of the analysis that must 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, as it contains a great deal 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: The only reason someone would hire an appraiser is if a property needs its worth assessed in a lender-based sales transaction.

Fact: Based upon their qualifications and designations, appraisers can and do provide a series of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.

Myth: A property inspection serves the same purpose as an appraisal.

Fact: A home inspection report serves a completely different purpose than an appraisal report. The job of the appraiser is to conclude an opinion of value in the appraisal process and through writing the report. House inspectors will produce a report that will explain the condition of the property and its major components and possible damage.