Appraisal myths debunked
Legally, a real estate appraiser has to be state certified to write substantiated appraisal reports for federally-backed sales. You also have the right to demand a copy of the finished report from your lending agency. Contact Willamette Valley Appraisal Professionals if you have any concerns about the appraisal procedure.
Myth: The value that is assessed by the appraiser will be the same as the market value.
Fact: This is not often the case; most states do support the suggestion that the assessed value is the same as market value, but not always. Usually when interior remodeling has occurred and the assessor is not aware of the improvement or other houses in the area have not been reassessed for a good length of time, it may vary wildly.
Myth: The buyer or the seller sometimes may have an influence in the value of the home depending upon for whom the appraiser is working.
Fact: The appraiser has no vested interest in the outcome of the report and should conduct his task with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: Any time market value is found, it should equal the replacement cost of the home.
Fact: Without any influence from any different parties to buy or sell, market value is what a willing buyer would pay a willing seller for a particular home. The dollar amount needed to rebuild a home is what constitutes the replacement cost.
Myth: Specific formulae, such as the price per square foot of the property, are the ways appraisers use to determine the price of a house.
Fact: There are many different formulae that an appraiser will use to make a detailed analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to undesirable facilities and the value of recently sold comparable houses.
Myth: In a strong economy - when the values of homes in a given area are reported to be increasing by a certain percentage - the prices of individual properties in the proximity can be expected to increase by that same percentage.
Fact: Worth increase of a specific home must be concluded on a case-by-case basis, factoring in data on comparable properties and other relevant specifications within the house itself. This is true in strong economic times as well as poor.
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Myth: You can usually find what a house is worth simply by looking at the outside.
Fact: To find an accurate price beyond all doubt, an appraiser must inspect the property on a variety of factors based on area, condition, improvements, amenities, and current market trends. Obviously, none of these variables can be derived just by looking at the home from the outside.
Myth: Because consumers fund the appraisal when applying for loans to buy or refinance their property, they legally own their appraisal report.
Fact: Unless a lending agency releases its vestment in the document, it is legally owned by the lending agency that ordered the appraisal. Under the Equal Credit Opportunity Act, any home buyer asking for a copy of the appraisal report must be given it by their lending agency.
Myth: Consumers need not worry about what is in their appraisal document so long as it exceeds the necessities of their lending company.
Fact: It is very important for consumers to read a copy of their appraisal so that they can verify the accuracy of the report, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes a near perfect record for future reference, comprised of useful and often-revealing data - 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 vicinity.
Myth: Appraisals are ordered only to estimate real estate property values in home sales involving mortgage-lending deals.
Fact: Appraisers can have many different qualifications and designations which allow them to perform a lot 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. The job of the appraiser is to form an opinion of value in the appraisal process and through producing the report. The purpose of a home inspector is to find the condition of the house and its main components, then produce a report on these findings.