Appraisal myths debunked
It is mandated by law that an appraiser must be state-licensed to create appraisals for federally-supported real estate purchases in California. Also by law, you are entitled to demand a copy of the completed appraisal from your lending agency. Contact our professional staff if you have any concerns about the appraisal procedure.
Myth: Market value will be equivocal to the assessed value of the property.
Fact: While most states back the concept that assessed value approximates estimated market value, this often is not the case. Interior remodeling that the assessor is unaware of and a lack of reassessment on nearby properties are exact examples of why there might be a differential in price.
Myth: The appraised value of a home will vary depending upon if the appraisal is ordered for the buyer or the seller.
Fact: There is no personal interest on the part of the appraiser in the result of the report, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is written.
Myth: Any time market value is established, it should equate to the replacement cost of the house.
Fact: Without any influence from any external parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific house. The dollar amount needed to rebuild a property is what forms the replacement cost.
Myth: Appraisers use a calculation, such as a specific price per square foot, to come to the value of a property.
Fact: Appraisers make a detailed analysis of all factors pertaining to the worth of a house, including its location, condition, size, proximity to facilities and recent values of comparable homes.
Myth: In a robust economy - when the prices of houses in a given neighborhood are found to be rising by a particular percentage - the prices of individual houses in the vicinity can be expected to appreciate by that same percentage.
Fact: All appreciation of worth is on an individual basis, found by information on relevant conditions and the data of comparable homes. It makes no difference if the economy is good or on the decline.
Have other questions about appraisers, appraising or real estate in Orange County or Seal Beach, CA?Contact Associate Appraisers of America
Myth: Just examining what the property looks like on the outside gives an excellent idea of its value.
Fact: Property worth is determined by a number of variables, including - but not limited to - area, condition, improvements, amenities, and market trends. An external inspection obviously can't provide all of the information necessary.
Myth: Because the consumer is the one who puts up the capital to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.
Fact: Legally, the appraisal report is owned by the lending company unless the lender releases their interest in the document. By the Equal Credit Opportunity Act, any home buyer demanding a copy of the appraisal report must be given one by their lending company.
Myth: It doesn't mean anything to consumers what's in the appraisal so long as it meets the necessities of their lending agency.
Fact: Only if home buyers look at a copy of their appraisal can they ensure 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 a valuable record for future reference, containing useful 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 vicinity.
Myth: There is no reason to order an appraisal unless you are trying to get an assessment of the worth of a house during a sales transaction involving a lender.
Fact: Based upon their qualifications and designations, appraisers can and may perform a lot of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A home inspection serves the same purpose as an appraisal.
Fact: Appraisal reports have almost nothing in common with a home inspection. The job of the appraiser is to come to an opinion of value in the appraisal process and through writing the report. A home inspector assesses the condition of the property and its major components and reports these findings.
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