Myth: Assessed value should always equate market value.
Reality: This is not often the case; most states do support the concept that the assessed value is the same as market value, but not always.
Interior remodeling that the assessor has not investigated and a dearth of reassessment on nearby homes are exact examples of why there might be a differential in price.
Myth: The buyer or the seller may have impact in the cost of the house depending upon for whom the appraiser is working.
Reality: The cost of the home does not affect the salary of the appraiser; as a result, the appraiser has no vested interest in the price of the property. This means that he will conduct task with impartiality and independence regardless of for whom the appraisal is conducted.
Myth: Any time market value is calculated, it should be the same as the replacement cost of the house.
Reality: Without any suggestion from any different parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a specific property.
The dollar amount necessary to rebuild a home is what forms the replacement cost.
Myth: There are certain methods that appraisers use to find the opinion of value of a home, such as the price per square foot.
Reality: There are many numerous methods that an appraiser will use to make an in-depth investigation of every factor in consideration of the property, such as the size, location, condition, how close it is to specific facilities and the values of recently sold comparable homes.
Myth: In a robust economy - when the prices of houses in a given region are reported to be rising by a certain percentage - the values of individual homes in the area can be expected to rise by that same percentage.
Reality: All increase of value is on a one-on-one basis, determined by information on relevant conditions and the data of comparable houses.
It doesn't matter if the economy is on the rise or declining.
Myth: Just seeing what the house looks like on its exterior gives a good idea of its value.
Reality: To find an accurate value beyond all doubt, an appraiser must assess the home on a variety of factors based on location, condition, improvements, amenities, and market trends.
An outside-only inspection definitely can't provide all of the data required.
Myth: Considering that the consumer is the party who provides the capital to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report is theirs.
Reality: The document is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the appraisal.
However, consumers must be provided with a copy of the appraisal upon written request, under the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the appraisal so long as it satisfies the necessities of their lending agency.
Reality: Only when consumers look at a copy of their appraisal report can they verify its accuracy and know if they should ask questions. 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, but not limited to, 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: Appraisals are ordered only to estimate home values in property sales involving mortgage-lending deals.
Reality: Appraisers can have many varied qualifications and designations which allow them to perform a lot of different services including - but not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: A property inspection serves the same purpose as an appraisal.
Reality: A home inspection serves a completely different purpose than an appraisal.
The reason behind an appraisal is to arrive at an opinion of market value during the appraisal process and the completion of the appraisal.
The purpose of a home inspector is to find the condition of the property and its major components, then produce a report on their inspection.
