Common myths about appraising
By law, an appraiser needs to be state-licensed to produce appraisals for federally-related transactions. Also by law, you have the right to request a copy of the completed appraisal from your lending agency. Contact Kent & Associates Appraisal if you have any concerns about the appraisal procedure.
Myth: Market value must be similar to the assessed value of the property.
Fact: This is not often the case; most states do support the suggestion that the assessed value is the same as market value, but not always. Generally when interior remodeling has occurred and the assessor is not aware of the improvement or properties in the neighborhood have not been reassessed for a good length of time, it may vary wildly.
Myth: The buyer or the seller can have leverage in the value of the home depending upon for whom the appraiser is working.
Fact: The appraiser has no vested interest in the outcome of the report and should conduct his job with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Market value will be the same as replacement cost.
Fact: The way market value is arrived at is based on what a buyer would be willing to pay a willing seller for a house without being under pressure from any outside group to buy or sell. If the home were rebuilt, the dollar amount needed to do so would make up the replacement cost.
Myth: Certain formulae, such as the price per square foot of the property, are what appraisers use to come to the cost of a house.
Fact: There are many varied calculations that an appraiser will use to make a detailed analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to specific facilities and the opinion of value of recently sold comparable homes.
Myth: When the economy is doing well and the cost of homes are found to be increasing by a certain percentage, the other properties in the proximity can be expected to rise based on that same percentage.
Fact: Value increase of a certain house has to be concluded on a case-by-case basis, factoring in information on comparable homes and other relevant elements. It makes no difference whether the economy is strong or terrible.
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Myth: Just looking at what the home looks like on its exterior gives an excellent idea of its value.
Fact: There are a multitude of different factors that conclude property value; these factors include area, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from simply viewing the home from the exterior.
Myth: Because consumers fund the appraisal when applying for loans to purchase or refinance their home, they own their appraisal report.
Fact: Unless a lender releases its vestment in the document, it is legally owned by the lending company that ordered the appraisal. However, consumers have to be given a copy of the appraisal upon written request, under the Equal Credit Opportunity Act.
Myth: There's no point for home buyers to even worry about what the report contains so long as their lending institution is satisfied.
Fact: A home buyer should definitely inspect their appraisal report; there may be some questions or some worries about the accuracy of the report that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can double as a record for the future, as it contains an incredible amount of 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: The only reason someone would hire an appraiser is if a home needs its worth estimated in a lender sales transaction.
Fact: Ordering an appraisal can fulfill a variety of necessities depending on the designations and certifications of the appraiser involved; appraisers can provide a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: You don't need to get an appraisal if you get a home inspection.
Fact: An appraisal report does not fulfill the same purpose as an inspection report. The function of an appraisal report is to arrive at an opinion of fair market value during the appraisal process and the production of the appraisal. A home inspector determines the condition of the property and its major components and reports these findings.