Common myths about appraising

By law, an appraiser must be state-licensed to offer appraisals for federally-supported sales. The law allows you to acquire a copy of your finished appraisal from your lending agency after it has been produced. Contact Willamette Valley Appraisal Professionals if you have any concerns about the appraisal process.

Myth: The value that is assessed by the appraiser should be the same as the market value.

Fact: While most states uphold the concept that assessed value approximates estimated market value, this commonly is not the case. Examples include when interior reconstruction has happened and the assessor has not seen the improvements, or when properties in the area have not been reassessed for an extended time.

Myth: The opinion of value of a property will change depending upon if the appraisal is provided for the buyer or the seller.

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

Myth: Market value should be the same as replacement cost.

Fact: The way market value is derived is based on what a buyer would likely pay a willing seller for a home without being under pressure from any external party to buy or sell. If the property 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 cost of a house.

Fact: An appraisal is an assertion of information based on the house's size, location, proximity to undesirable facilities, the condition of the house and the price of recent comparable sales. You can depend on Willamette Valley Appraisal Professionals's appraisers to be professional in assessing this information.

Myth: As properties increase their worth by a certain percentage - in a strong economy - the homes within the same neighborhood are figured to increase by the same amount.

Fact: All increase of worth is on an individual basis, determined by data on relevant elements and the data of comparable homes. It makes no difference if the economy is powerful or bad.

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

Fact: There are a number of different variables that determine the value of a home; these factors include location, condition, improvements, amenities, and market trends. An exterior inspection definitely can't provide all of the data required.

Myth: Since you're the one funding for the appraisal report when applying for your loan to buy or refinance real estate, you own the provided appraisal report.

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

Myth: There's no reason for home buyers to even concern themselves with what the appraisal report contains so long as their lending company is fine with the contents therein.

Fact: Only if consumers look through a copy of their appraisal report can they ensure 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 appraisal can double as a record for the future, containing a great deal 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 area.

Myth: Appraisals are ordered only to assess building values in house sales involving mortgage-lending deals.

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

Myth: A property inspection serves the same purpose as an appraisal.

Fact: Appraisal reports are nothing like a home inspection. The function of an appraisal is to find an opinion of fair market value during the appraisal process and the production of the report. A home inspector determines the condition of the house and its major components and reports their findings.