Appraisal myths & facts
Legally, a real estate appraiser must be state certified to perform substantiated real estate appraisals for federally-related sales. The law allows you to receive a copy of your finished report from your lender after it has been produced. Contact Associate Appraisers of America if you have any concerns about the appraisal procedure.
Myth: The value that is ascertained by the appraiser is required to be equivalent to the market value.
Fact: This usually isn't true; most states do support the idea that the assessed value is the same as market value, but not always. Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby houses are exact examples of why there might be a differential in price.
Myth: The buyer or the seller may have some pull in the cost of the house depending upon for whom the appraiser is working.
Fact: The price of the house does not affect the salary of the appraiser; as such, the appraiser has no personal interest in the worth of the house. Obviously, he will complete his services with impartiality and independence regardless for whom the appraisal is created.
Myth: The replacement cost of the property will be is on par with the market value.
Fact: The way market value is derived is based on what a buyer would be willing to pay a willing seller for a house without being under pressure from any outside group to buy or sell. If the property were rebuilt, the dollar amount required to do so would be the replacement cost.
Myth: Certain methods, such as the price per square foot of the property, are the methods appraisers use to arrive at the value of a property.
Fact: Appraisers complete a detailed analysis of all factors in consideration to the price of a property, including its location, condition, size, proximity to facilities and recent worth of comparable properties.
Myth: When the economy is robust and the value of houses are reported to be appreciating by a certain percentage, the other properties in the proximity can be expected to increase based on that same percentage.
Fact: All appreciation of value is on a one-on-one basis, found by information on relevant conditions and the data of comparable houses. It doesn't matter if the economy is on the rise or declining.
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Myth: You can commonly tell what a house is worth simply by looking at the exterior.
Fact: To determine an accurate price 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 looking at the house from the outside.
Myth: Because consumers fund appraisals when applying for loans to purchase or refinance their house, they own their appraisal report.
Fact: Legally, the appraisal is owned by the lender unless the lender relinquishes their interest in the appraisal. However, consumers must be supplied with a copy of the report upon written request, due to the Equal Credit Opportunity Act.
Myth: It doesn't matter to consumers what's in the appraisal so long as it satisfies the requirements of their lender.
Fact: Only if consumers read a copy of their report can they verify its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes an excellent record for future reference, comprised of helpful and often-revealing data - 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: Appraisals are ordered only to estimate home values in house sales involving mortgage-lending transactions.
Fact: Appraisers can have many varied qualifications and designations which allow them to perform a multitude of different services including - but definitely not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: You don't need to get an appraisal if you have had a home inspection.
Fact: An appraisal does not fulfill the same purpose as an inspection. The point of an appraisal report is to find an opinion of fair market value during the appraisal process and the completion of the report. The purpose of a home inspector is to determine the condition of the home and its main components, then compose a report on these findings.
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