Myth: Market value needs to be equivocal to the assessed value of the property.
Reality: While most states uphold the concept that assessed value is the same as estimated market value, this often is not the case. There are times when interior remodeling has been done and the assessor is not aware of the improvement or properties in the area have not been reassessed for a good length of time, it may vary widely.
Myth: The buyer or the seller sometimes may have leverage in the cost of the home depending upon for whom the appraiser is working.
Reality: There is no real interest on the part of the appraiser in the outcome of the report, therefore he will conduct his work with impartiality and independence, no matter of for whom the appraisal is ordered.
Myth: The replacement cost of the home is always in line with the market value.
Reality: Without any suggestion from any external parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific home. If the house were rebuilt, the dollar amount required to do so would form the replacement cost.
Myth: There are certain methods that appraisers use to determine the opinion of value of a property, such as the price per square foot.
Reality: Appraisers make a full analysis of all factors pertaining to the value of a property, including its location, condition, size, proximity to facilities and recent values of comparable houses.
Myth: As properties appreciate by a certain percentage - in a robust economic state - the homes within the same neighborhood are figured to increase by the same amount.
Reality: The appreciation of a specific property must be determined on an individualized basis, factoring in data on comparable homes and other relevant specifications within the property itself. This is true in robust economic times as well as poor.
Myth: Just seeing what the home looks like on its exterior gives a good idea of its value.
Reality: There are a number of different variables that determine the value of a home; these factors include area, condition, improvements, amenities, and market trends. An exterior inspection obviously can't provide all of the information necessary.
Myth: Because the consumer is the one who puts up the money to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal is theirs.
Reality: Unless a lender releases its vestment in the report, it is legally owned by the lending agency that ordered the appraisal. By the Equal Credit Opportunity Act, any consumer demanding a copy of the document must be given one by their lender.
Myth: It doesn't mean anything to consumers what's in the appraisal so long as it meets the requirements of their lending company.
Reality: It is almost imperative for consumers to read a copy of their appraisal so that they can double-check the accuracy of the document, in case it's required to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of information contained in a report that will probably 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 order an appraisal unless you are trying to get an estimate of the value of a house during a sales transaction involving a lending agency.
Reality: Ordering an appraisal can fulfill a variety of necessities depending on the designations and certifications of the appraiser involved; appraisers can perform a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: A property inspection serves the same purpose as an appraisal.
Reality: A home inspection has a completely different purpose than an appraisal report. The job of the appraiser is to form an opinion of value in the appraisal process and through producing the report. The purpose of a home inspector is to assess the condition of the house and its main components, then compose a report on their inspection.
