Myth: Market value should be the same as the assessed value of the property.
Reality: While most states uphold the idea that assessed value is the same as estimated market value, this generally is not the case. Interior remodeling that the assessor has not investigated and a dearth of reassessment on nearby houses are perfect examples of why there might be a differential in price.
Myth: Depending on if the appraisal is written for the buyer or the seller, the cost of the property will vary.
Reality: There is no personal interest on the part of the appraiser in the result of the analysis, therefore he will complete his work with impartiality and independence, despite of for whom the appraisal is ordered.
Myth: Market value will mirror replacement cost.
Reality: Market value is based on what a willing buyer would be interested in paying a willing seller for a certain home, with neither being under pressure to buy or sell. The dollar amount required to reconstruct a home is what forms the replacement cost.
Myth: Certain methods, such as the price per square foot, are what appraisers use to arrive at the value of a property.
Reality: Appraisers make a full analysis of all factors pertaining to the value of a house, including its location, condition, size, proximity to facilities and recent sale prices of comparable properties.
Myth: As houses appreciate by a certain percentage - in a strong economy - the properties in proximity are expected to appreciate by the same amount.
Reality: The appreciation of a specific house must be concluded on an individualized basis, factoring in information on comparable homes and other relevant elements. It makes no difference whether the economy is powerful or poor.
Myth: The home's outside is determinate of the actual value of the property; it is unnecessary to do an interior appraisal.
Reality: There are a multitude of different variables that conclude property value; these factors include area, condition, improvements, amenities, and market trends. An external inspection definitely can't provide all of the data needed.
Myth: Since you're the one coughing up the cash for the appraisal when applying for your loan to buy or refinance your home, you own the ordered appraisal.
Reality: The document is, in fact, legally owned by the lender - unless the lender "releases its interest" in the report. Consumers have to be given a version of the report upon written request due to the Equal Credit Opportunity Act.
Myth: Consumers need not care about what is in their appraisal so long as it satisfies the needs of their lending group.
Reality: Only when consumers examine a copy of their report can they ensure 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 report makes a near perfect record for future reference, comprised of helpful 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 building values in home sales involving mortgage-lending transactions.
Reality: Appraisers can have many different qualifications and designations which allow them to provide a multitude 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: An appraisal is the same as a home inspection.
Reality: A home inspection has a completely different purpose than an appraisal. The purpose of an appraisal report is to find an opinion of market value during the appraisal process and the completion of the appraisal report. A home inspector determines the condition of the house and its major components and reports these findings.
