Appraisal myths & facts

By law, an appraiser must be state-licensed to produce appraisals for federally-supported purchases. Also by law, you have the ability to request a copy of the finished appraisal report from your lending agency. Contact ASAP Appraisal Services, Inc. if you have any concerns about the appraisal process.

Myth: The value that is ascertained by the appraiser is required to be the same as the market value.

Fact: This usually isn't true; most states do support the idea that the assessed value is the same as market value, but not always. Interior remodeling that the assessor is not aware of and a lack of reassessment on nearby houses are exact examples of why this occurs.

Myth: Depending on if the appraisal is done for the buyer or the seller, the opinion of value of the house will vary.

Fact: There is no real interest on the part of the appraiser in the outcome of the analysis, therefore he will conduct his work with impartiality and independence, regardless for whom the appraisal is written.

Myth: Any time market value is established, it should be the same as the replacement cost of the property.

Fact: Without any influence from any external parties to buy or sell, market value is what a willing buyer would pay a willing seller for a specific home. If the home were rebuilt, the dollar amount necessary to do so would set the replacement cost.

Myth: Appraisers use a formula, like a specific price per square foot, to arrive at the worth of a property.

Fact: There are many different methods that an appraiser will use to make an in-depth analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to certain facilities and the value of recently sold comparable houses.

Myth: As houses appreciate by a specific percentage - in a robust economic state - the homes in proximity are expected to appreciate by the same amount.

Fact: All appreciation of value is on an individual basis, found by information on relevant elements and the data of comparable properties. It doesn't matter if the economy is doing well or declining.

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Myth: The house's outside is determinate of the actual price of the house; there is no need to do an interior inspection.

Fact: House worth is concluded by a number of factors, including location, condition, improvements, amenities, and market trends. An external inspection obviously can't provide all of the information needed.

Myth: Because consumers fund appraisal reports when applying for loans to buy or refinance real estate, they own their appraisal report.

Fact: Unless a lender releases its interest in the report, it is legally owned by the lending company that purchased the appraisal. Consumers have to be provided with a copy of the document through request as per the Equal Credit Opportunity Act.

Myth: Consumers need not be concerned with what is in their document so long as it satisfies the needs of their lending agency.

Fact: Only if consumers examine a copy of their report can they verify its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes a valuable record for future reference, filled with 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 area.

Myth: Appraisers are hired only to estimate home values in property sales involving mortgage-lending deals.

Fact: Hiring an appraiser can fulfill a variety of wants depending on the designations and certifications of the appraiser involved; appraisers can provide a great deal of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.

Myth: An appraisal is no different than a home inspection.

Fact: A home inspection report has a completely different purpose than an appraisal. The function of an appraisal report is to find an opinion of fair market value during the appraisal process and the production of the report. The purpose of a home inspector is to approximate the condition of the property and its main components, then write a report on these conclusions.