Common myths about appraising

It is mandated by law that an appraiser must be state-licensed to produce appraisal reports for federally-supported home transactions in Oregon. Also by law, you have the ability to receive a copy of the finished appraisal report from your lending agency. Contact Willamette Valley Appraisal Professionals if you have any concerns about the appraisal process.

Myth: Assessed value should be equal to market value.

Fact: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. Examples include when interior reconstruction has happened and the assessor is unaware of the improvements, or when properties in the area have not been reassessed for an prolonged period.

Myth: The buyer or the seller will have an influence in the cost of the home depending upon for whom the appraiser is working.

Fact: There is no vested interest on the part of the appraiser in the result of the appraisal, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is ordered.

Myth: Any time market value is found, it should be similar to the replacement cost of the house.

Fact: Market value is found by what a willing buyer would likely pay a willing seller for a certain home, with neither being under duress to buy or sell. Replacement value is the dollar amount needed to reconstruct a home in-kind.

Myth: Appraisers use a calculation, such as a certain price per square foot, to arrive at the value of a house.

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

Myth: When the economy is on the rise and the sales prices of houses are reported to be increasing by a certain percentage, the other houses in the proximity can be expected to increase based on that same percentage.

Fact: Cost increase of a specific property has to be determined on an individualized basis, factoring in information on comparable houses and other relevant considerations. It doesn't matter if the economy is on the rise or declining.

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Myth: Just seeing what the home looks like on its exterior gives an idea of its worth.

Fact: To determine an accurate price beyond all doubt, an appraiser must inspect the home on a variety of factors based on location, condition, improvements, amenities, and current market trends. As you can see, none of these factors can be found simply by examining the house from the outside.

Myth: Because the consumer is the party who puts up the funding to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal belongs to them.

Fact: Unless a lending agency releases its interest in the appraisal report, it is legally owned by the lending company that ordered the appraisal. Because of the Equal Credit Opportunity Act, any consumer asking for a copy of the report must be given one by their lender.

Myth: Consumers need not care about what is in their report so long as it exceeds the needs of their lending group.

Fact: Only if home buyers read a copy of their appraisal 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 near perfect record for future reference, filled with helpful and often-revealing data - including 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: There is no reason to order an appraisal unless you are trying to get an estimate of the cost of a home during a sales transaction involving a lending agency.

Fact: Appraisers can have many varied qualifications and designations which allow them to perform 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: A house inspection serves the same purpose as an appraisal.

Fact: An appraisal report does not serve the same purpose as an inspection report. The job of the appraiser is to find an opinion of value in the appraisal process and through creating the report. House inspectors will produce a report that will show the condition of the home and its major components and possible damage.