Common myths about appraising
It is mandated by law that an appraiser must be state-licensed to produce appraisal reports for federally-supported real estate sales in Oregon. The law gives you the right to receive a copy of your finished report from your lending agency after it has been provided. Contact us if you have any concerns about the appraisal procedure.
Myth: Assessed value generally will equate to 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. Examples include when interior reconstruction has occurred and the assessor does not know about the improvements, or when properties in the area have not been reassessed for an prolonged time.
Myth: The buyer or the seller often will have impact in the value of the property depending upon for whom the appraiser is working.
Fact: The appraiser has no vested interest in the outcome 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 found, it should equal the replacement cost of the property.
Fact: The way market value is derived is based on what a buyer would be willing to pay a willing seller for a home without being under influence from any external party to purchase or sell. Replacement value is the dollar amount needed to rebuild a property in-kind.
Myth: Specific formulae, like the price per square foot, are the ways appraisers use to come to the cost of a house.
Fact: There are many differing formulae that an appraiser will use to make a comprehensive analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to undesirable facilities and the opinion of value of recently sold comparable houses.
Myth: As homes appreciate by a certain percentage - in a strong economic state - the properties nearby are expected to increase by the same amount.
Fact: Value appreciation of a certain property has to be determined on an individualized basis, factoring in data on comparable houses and other relevant specifications within the house itself. This is true in good economic times as well as bad.
Have other questions about appraisers, appraising or real estate in Clackamas County or Milwaukie, OR?Contact us
Myth: The home's exterior is determinate of the actual worth of the property; it is unnecessary to do an interior inspection.
Fact: There are a number of different factors that determine property value; these factors include area, condition, improvements, amenities, and market trends. An exterior inspection certainly can't provide all of the data required.
Myth: Since the consumer is the person who provides the money to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal is theirs.
Fact: The report is, in fact, legally owned by the lending agency - unless the lender "relinquishes its interest" in the appraisal. However, consumers must be supplied with a copy of the appraisal report upon written request, because of the Equal Credit Opportunity Act.
Myth: There's no reason for consumers to even concern themselves with what the appraisal contains so long as their lending institution is satisfied.
Fact: A home buyer should definitely read through their document; there could be some questions or some concerns with the accuracy of the analysis that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of information stored in an appraisal that should be useful to the home buyer in the future, such as 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: The only reason someone would order an appraisal is if a property needs its value estimated in a lender sales transaction.
Fact: Depending upon their qualifications and designations, appraisers can and often do provide a series of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: You don't need to get an appraisal if you get a home inspection.
Fact: An appraisal does not fulfill the same purpose as an inspection. The purpose of the appraiser is to conclude an opinion of value in the appraisal process and through producing the report. A home inspector analyzes the condition of the building and its major components and reports their findings.