Common myths about appraising
By law, an appraiser is required to be state-licensed to produce appraisals for federally-supported purchases. The law allows you to acquire a copy of your completed appraisal from your lending agency after it has been produced. Contact A. M. Appraisals if you have any concerns about the appraisal process.
Myth: Market value has to be similar to the assessed value of the property.
Fact: While most states back the idea that assessed value is the same as estimated market value, this usually is not the case. Examples include when interior reconstruction has occurred and the assessor is unaware of the improvements, or when properties in the area have not been reassessed for an prolonged period of time.
Myth: The value of a property will vary depending upon whether the appraisal is conducted for the buyer or the seller.
Fact: There is no real interest on the part of the appraiser in the result of the appraisal, therefore he will conduct his work with impartiality and independence, regardless for whom the appraisal is written.
Myth: Any time market value is established, it should be the same as the replacement cost of the house.
Fact: Market value is derived from what a willing buyer would likely pay a willing seller for a certain property, with neither being under pressure to buy or sell. If the property were rebuilt, the dollar amount required to do so would be the replacement cost.
Myth: There are specific methods that real estate appraisers use to determine the cost of a home, such as the price per square foot.
Fact: There are many differing ways that an appraiser will use to make a full analysis of every factor pertaining to the home, such as the size, location, condition, how close it is to specific facilities and the cost of recently sold comparable homes.
Myth: In a powerful economy - when the costs of homes in a given county are found to be rising by a certain percentage - the values of individual homes in the proximity can be expected to increase by that same percentage.
Fact: All appreciation of value is on a one-on-one basis, concluded by data on relevant elements and the data of comparable homes. It doesn't matter if the economy is on the rise or declining.
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Myth: You can usually find what a property is worth simply by looking at the outside.
Fact: There are a number of different factors that determine the value of a house; these factors include location, condition, improvements, amenities, and market trends. An outside-only inspection obviously can't provide all of the information required.
Myth: Because the consumer is the person who puts up the funding to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal belongs to them.
Fact: Legally, the document is owned by the lending company unless the lender relinquishes their interest in the appraisal. Consumers have to be given a copy of the document upon written request due to the Equal Credit Opportunity Act.
Myth: There's no point for consumers to even concern themselves with what the appraisal contains so long as their lending institution is satisfied.
Fact: It is almost imperative for consumers to check over a copy of their appraisal report so that they can double-check the accuracy of the report, in case it's required to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of information contained in an report 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 proximity.
Myth: There is no reason to hire an appraiser unless you are trying to get an estimate of the price of a property during a sales transaction involving a lending agency.
Fact: Hiring an appraiser can fulfill a variety of needs 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: There's no need to get an appraisal if you have had a home inspection.
Fact: An appraisal report does not fulfill the same purpose as an inspection report. An appraiser decides upon an opinion of value in the appraisal process and resulting appraisal. House inspectors will create a report that will express the condition of the property and its major components and possible damage.
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