Appraisal myths & facts

By law, an appraiser needs to be state-licensed to perform appraisals for federally-backed purchases. The law entitles you to get a copy of your finished appraisal report from your lender after it has been provided. Contact A. M. Appraisals if you have any concerns about the appraisal procedure.

Myth: Market value will be the same as the assessed value of the property.

Fact: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. Examples include when interior reconstruction has occurred and the assessor is unaware of the improvements, or when houses in the vicinity have not been reassessed for an prolonged period.

Myth: The buyer or the seller may have an influence in the value of the house depending upon for whom the appraiser is working.

Fact: The appraiser has no vested interest in the result of the appraisal report and should conduct his task with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.

Myth: The replacement value of the property will be is on par with the market value.

Fact: Market value is based on what a willing buyer would likely pay a willing seller for a specific property, with neither being under undue influence to buy or sell. The dollar amount demanded to reconstruct a property is what forms the replacement cost.

Myth: Appraisers use a formula, such as a certain price per square foot, to come to the worth of a home.

Fact: Appraisers make a detailed analysis of all factors in consideration to the value of a house, including its location, condition, size, proximity to facilities and recent worth of comparable properties.

Myth: When the economy is doing well and the sales prices of homes are found to be rising by a certain percentage, the other properties in the neighborhood can be expected to rise based on that same percentage.

Fact: Any value at which an appraiser arrives in regards to a particular property is always individualized, based on certain factors found from the information of comparable houses and other specifications within the home itself. This is true in excellent economic times as well as bad.

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Myth: You can generally tell what a property is worth simply by looking at the exterior.

Fact: To find an accurate price beyond all doubt, an appraiser must inspect the home on a variety of factors based on area, condition, improvements, amenities, and market trends. An exterior inspection certainly can't provide all of the data necessary.

Myth: Since you're the one funding for the appraisal report when applying for your loan to buy or refinance your house, you own the provided appraisal.

Fact: Unless a lender releases its vestment in the document, it is legally owned by the lending agency that purchased the appraisal. By the Equal Credit Opportunity Act, any home buyer asking for a copy of the appraisal report must be provided with it by their lending company.

Myth: It doesn't concern consumers what's in the report so long as it meets the needs of their lender.

Fact: A consumer should definitely inspect their document; there might be some questions or some worries with the accuracy of the appraisal report that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes an excellent record for future reference, comprised of useful and often-revealing information - 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 vicinity.

Myth: There is no reason to hire an appraiser unless you are trying to get an assessment of the cost of a home during a sales transaction involving a lending institution.

Fact: Appraisers can have many varied qualifications and designations which allow them to provide a variety 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: An appraisal report is no different than a home inspection.

Fact: A home inspection report has a completely different purpose than an appraisal report. The purpose of the appraiser is to come to an opinion of value in the appraisal process and through producing the report. A home inspector determines the condition of the property and its major components and reports their findings.

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