Myth: Assessed value should always equate market value.
Reality: While most states back the suggestion that assessed value is equal to estimated market value, this often is not the case.
Examples include when interior reconstruction has occurred and the assessor has not seen the improvements, or when homes in the area have not been reassessed for an prolonged period.
Myth: The appraised value of a home will vary depending upon whether the appraisal is ordered for the buyer or the seller.
Reality: The appraiser has no personal interest in the result of the appraisal and should render his job with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: The replacement value of the house should be on par with the market value.
Reality: The way market value is found is based on what a buyer would be willing to pay a willing seller for a property without being under influence from any external party to purchase or sell.
The dollar amount required to rebuild a property is what shows the replacement cost.
Myth: Specific methods, like the price per square foot, are the methods appraisers use to come to the value of a home.
Reality: There are many numerous formulae that an appraiser will use to make a full investigation of every factor in consideration of the property, such as the size, location, condition, how close it is to undesirable facilities and the values of recently sold comparable properties.
Myth: When the economy is on the rise and the sales prices of homes are found to be rising by a certain percentage, the other houses in the proximity can be expected to appreciate based on that same percentage.
Reality: The appreciation of a certain house is always concluded on a case-by-case basis, factoring in information on comparable properties and other relevant specifications within the property itself.
It makes no difference whether the economy is powerful or on the decline.
Myth: You can commonly tell what a property is worth simply by looking at the exterior.
Reality: To find a concrete value beyond all doubt, an appraiser must examine the home on a variety of factors based on location, condition, improvements, amenities, and current market trends.
An outside-only inspection certainly can't provide all of the data needed.
Myth: Because the consumer is the person who provides the money to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal belongs to them.
Reality: Unless a lending agency releases its interest in the appraisal report, it is legally owned by the lending company that ordered the appraisal.
By the Equal Credit Opportunity Act, any home buyer requesting a copy of the report must be given one by their lender.
Myth: Home buyers need not worry about what is in their appraisal so long as it exceeds the needs of their lending agency.
Reality: It is a very good idea for home buyers to peruse a copy of their appraisal 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.
Also, the appraisal report makes a valuable record for future reference, comprised of helpful and often-revealing data - 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: The only reason someone would hire an appraiser is if a home needs its value assessed in a lender-based sales transaction.
Reality: Ordering an appraisal can fulfill a variety of wants depending on the designations and certifications of the appraiser involved; appraisers can perform a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: An appraisal report is no different than a home inspection report.
Reality: A home inspection has a completely different purpose than an appraisal report.
The reason behind an appraisal is to form an opinion of market value during the appraisal process and the completion of the report.
The task of a home inspector is to determine the condition of the home and its main components, then produce a report on these conclusions.