Common myths about appraising

By law, an appraiser must be state-licensed to produce appraisals for federally-supported purchases. You are also entitled by law to acquire a copy of the completed report from your lending agency. Contact us if you have any questions about the appraisal process.

Myth: Assessed value generally will be equal to market value.

Fact: While most states back the idea that assessed value equates estimated market value, this often is not the case. Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby properties are prime examples of why the price can vary.

Myth: Depending on whether the appraisal is produced for the buyer or the seller, the value of the property will vary.

Fact: There is no vested interest on the part of the appraiser in the outcome of the analysis, therefore he will complete his work with impartiality and independence, no matter for whom the appraisal is ordered.

Myth: Any time market value is established, it should be the same as the replacement cost of the house.

Fact: Market value is acquired by what a willing buyer would be interested in paying a willing seller for a specific property, with neither being under undue influence to buy or sell. The dollar amount demanded to rebuild a house is what constitutes the replacement cost.

Myth: Certain formulae, such as the price per square foot of the property, are what appraisers use to come to the worth of a house.

Fact: An appraisal report is an amalgamation of information concluded from the house's size, location, proximity to specific facilities, the condition of the house and the worth of recent comparable sales. You can depend on Associate Appraisers of America's appraisers to be forthright in assessing this information.

Myth: When the economy is robust and the worth of homes are found to be appreciating by a certain percentage, the other properties in the neighborhood can be expected to appreciate based on that same percentage.

Fact: Price increase of a certain property is always determined on an individualized basis, factoring in information on comparable houses and other relevant specifications within the home itself. It doesn't matter if the economy is doing well or declining.

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Myth: The house's exterior is determinate of the actual value of the house; it is unnecessary to do an interior inspection.

Fact: Home value is concluded by a number of factors, including - but not limited to - area, condition, improvements, amenities, and market trends. There's no real way to get all of this information from just examining the house from the exterior.

Myth: Because consumers fund the appraisal when applying for loans to purchase or refinance their home, they own their appraisal report.

Fact: Legally, the report is owned by the lending company unless the lender relinquishes their interest in the report. Consumers must be provided with a version of the document through request because of the Equal Credit Opportunity Act.

Myth: Consumers need not care about what is in their appraisal document so long as it satisfies the necessities of their lending group.

Fact: A home buyer should definitely inspect their report; there might be some questions or some concerns about the accuracy of the appraisal report that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes a valuable record for future reference, filled with helpful and often-revealing data - including 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 order an appraisal is if a home needs its worth assessed in a lender sales transaction.

Fact: Hiring an appraiser can fulfill a variety of needs depending on the designations and certifications of the appraiser involved; appraisers can provide a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.

Myth: An appraisal is the same as a home inspection.

Fact: An appraisal report does not fulfill the same purpose as an inspection report. An appraiser concludes on an opinion of value in the appraisal process and resulting appraisal. A home inspector analyzes the condition of the building and its major components and reports these findings.

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