Appraisal myths debunked
By law, an appraiser needs to be state-licensed to perform appraisals for federally-supported purchases. The law allows you to receive a copy of your finished report from your lending agency after it has been provided. Contact us if you have any concerns about the appraisal procedure.
Myth: Market value will always be similar to the assessed value of the property.
Fact: While most states back the concept that assessed value equates estimated market value, this often is not the case. Examples include when interior reconstruction has occurred and the assessor does not know about the improvements, or when houses in the area have not been reassessed for an prolonged period of time.
Myth: The value of a home will be different depending upon if the appraisal is conducted for the buyer or the seller.
Fact: The appraiser has no vested interest in the result of the report and should render services with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Any time market value is established, it should equal the replacement cost of the house.
Fact: Without any pressure from any external parties to buy or sell, market value is what a willing buyer would pay an interested seller for a particular house. Replacement cost is the dollar amount necessary to reconstruct a home in-kind.
Myth: Appraisers use a formula, such as a certain price per square foot, to arrive at the cost of a property.
Fact: There are many numerous calculations that an appraiser will use to make a comprehensive investigation of every factor in consideration of the house, such as the size, location, condition, how close it is to undesirable facilities and the sales price of recently sold comparable properties.
Myth: When the economy is strong and the value of homes are found to be appreciating by a certain percentage, the other houses in the neighborhood can be expected to appreciate based on that same percentage.
Fact: Price increase of a specific property is always determined on an individualized basis, factoring in data on comparable houses and other relevant specifications within the property itself. It doesn't matter if the economy is on the rise or declining.
Have other questions about appraisers, appraising or real estate in Orange County or Seal Beach, CA?Contact us
Myth: Just examining what the house looks like on its exterior gives an excellent idea of its worth.
Fact: There are a multitude of different factors that show the value of a house; these factors include area, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from simply inspecting the house from the exterior.
Myth: Since you're the one funding for the appraisal report when applying for the loan to buy or refinance your house, you own the ordered appraisal.
Fact: Unless a lender releases its vestment in the report, it is legally owned by the lending company that purchased the appraisal. However, home buyers must be given a copy of the appraisal upon written request, due to the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the appraisal so long as it meets the needs of their lender.
Fact: A consumer should definitely read through their document; there will probably be some questions or some worries 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. There is an incredible amount of data contained in an appraisal that should be useful to the consumer in the future, such as 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 hire an appraiser unless you are trying to get an estimate of the worth of a home during a sales transaction involving a lending company.
Fact: Hiring an appraiser can fulfill a variety of wants depending on the designations and certifications of the appraiser involved; appraisers can provide a great deal of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: There's no reason to get an appraisal if you order a home inspection.
Fact: A home inspection report has a completely different purpose than an appraisal report. The point of an appraisal report is to form an opinion of fair market value during the appraisal process and the production of the appraisal. A home inspector analyzes the condition of the home and its major components and reports these findings.
Got a Question?
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.