Appraisal myths & facts
Legally, an appraiser is required to be state certified to produce legitimate appraisal reports for federally-backed sales. The law entitles you to get a copy of your finished appraisal report from your lender after it has been produced. Contact us if you have any concerns about the appraisal process.
Myth: Assessed value generally will be the same as 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. Interior remodeling that the assessor has not investigated and a lack of reassessment on nearby homes are exact examples of why this occurs.
Myth: The buyer or the seller may have impact in the value of the house 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 report, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is ordered.
Myth: The replacement value of the home will be is on par with the market value.
Fact: Market value is arrived at through what a willing buyer would likely pay a willing seller for a specific property, with neither being under undue influence to buy or sell. Replacement value is the dollar amount needed to reconstruct a home in-kind.
Myth: Specific methods, like the price per square foot of the property, are the methods appraisers use to come to the worth of a property.
Fact: An appraisal is an assertion of data based on the home's size, location, proximity to some facilities, the condition of the property and the price of recent comparable sales. You can depend on Personal Service Realty's Residential Valuation Group's staff to be ethical in assessing this data.
Myth: When the economy is strong and the worth of houses are reported to be rising by a certain percentage, the other homes in the neighborhood can be expected to rise based on that same percentage.
Fact: Cost increase of a specific property must be concluded on a case-by-case basis, factoring in information on comparable properties and other relevant elements. It makes no difference if the economy is robust or poor.
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Myth: Just examining what the property looks like on its exterior gives a good idea of its value.
Fact: House value is concluded by a multitude of factors, including - but not limited to - area, condition, improvements, amenities, and market trends. There's no real way to get all of this data from just viewing the home from the exterior.
Myth: Since the consumer is the one who provides the money to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.
Fact: Unless a lender releases its vestment in the appraisal report, it is legally owned by the lending agency that ordered the appraisal. Because of the Equal Credit Opportunity Act, any consumer requesting a copy of the document must be given it by their lending agency.
Myth: Home buyers need not care about what is in their appraisal report so long as it exceeds the needs of their lending company.
Fact: A home buyer should definitely inspect their report; there may be some questions or some concerns about the accuracy of the report that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of data contained in an appraisal that could be useful to the consumer 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 area.
Myth: The only reason someone would hire an appraiser is if a property needs its worth assessed in a lender sales transaction.
Fact: Hiring an appraiser can fulfill a variety of wants depending on the designations and certifications of the appraiser involved; appraisers can provide a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: A home inspection serves the same purpose as an appraisal.
Fact: An appraisal report does not fulfill the same purpose as an inspection. The function of an appraisal is to conclude upon an opinion of fair market value during the appraisal process and the completion of the appraisal report. House inspectors will produce a report that will explain the condition of the house and its major components and possible damage.
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