Common myths about appraising
By law, an appraiser needs to be state-licensed to perform appraisals for federally-related purchases. The law gives you the right to acquire a copy of your completed appraisal report from your lender after it has been provided. Contact our professional staff if you have any concerns about the appraisal process.
Myth: Market value should be similar to the assessed value of the property.
Fact: It could be that Arizona, like most states, validates the idea that the assessed value is the same as the market value; however, this certainly varies based on state-to-state. Usually when interior remodeling has been done and the assessor is has not investigated the improvement or properties in the neighborhood have not been reassessed for years or more, it may vary wildly.
Myth: Depending on whether the appraisal is provided for the buyer or the seller, the cost of the house will vary.
Fact: The appraiser has no personal interest in the result of the report and should conduct services with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Any time market value is established, it should equal the replacement cost of the home.
Fact: Market value is arrived at through what a willing buyer would be interested in paying a willing seller for a specific house, with neither being under pressure to buy or sell. Replacement value is the dollar amount required to rebuild a home in-kind.
Myth: Specific methods, like the price per square foot, are the methods appraisers use to ascertain the cost of a house.
Fact: Appraisers complete a full analysis of all factors pertaining to the cost of a home, including its location, condition, size, proximity to facilities and recent values of comparable houses.
Myth: In a robust economy - when the values of properties in a given county are reported to be rising by a particular percentage - the prices of individual homes in the area can be expected to rise by that same percentage.
Fact: Price appreciation of a specific house must be concluded on a case-by-case basis, factoring in information on comparable properties and other relevant specifications within the home itself. It doesn't matter if the economy is doing well or declining.
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Myth: You can commonly see what a home is worth simply by looking at the exterior.
Fact: To determine an accurate worth beyond all doubt, an appraiser must assess the property on a variety of factors based on location, condition, improvements, amenities, and market trends. An external inspection definitely can't provide all of the data needed.
Myth: Since you're the one paying for the appraisal report when applying for your loan to purchase or refinance your home, you own the ordered appraisal.
Fact: The appraisal is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the document. Because of the Equal Credit Opportunity Act, any home buyer requesting a copy of the document must be given one by their lending agency.
Myth: Home buyers need not care about what is in their appraisal report so long as it meets the necessities of their lending group.
Fact: Only if home buyers read a copy of their appraisal report can they double-check its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can double as a record for the future, containing an exorbitant amount of data - including, but certainly 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 proximity.
Myth: Appraisers are hired only to estimate house values in property sales involving mortgage-lending transactions.
Fact: Appraisers can have many different qualifications and designations which allow them to perform a series of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: A home inspection serves the same purpose as an appraisal.
Fact: Appraisal reports are nothing like a home inspection. The purpose of the appraiser is to come to an opinion of value in the appraisal process and through writing the report. House inspectors will compose a report that will determine the condition of the home and its major components and possible damage.