Appraisal myths & facts
It is mandated by the government that an appraiser needs to be state-licensed to write appraisal reports for federally-related property transactions in California. Also by law, you have the ability to demand a copy of the completed appraisal from your lending agency. Contact our professional staff if you have any concerns about the appraisal process.
Myth: Assessed value should be the same as to market value.
Fact: This is not often the case; 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 happened and the assessor has not seen the improvements, or when properties in the area have not been reassessed for an prolonged period.
Myth: The buyer or the seller may have impact in the cost of the property depending upon for whom the appraiser is working.
Fact: There is no personal interest on the part of the appraiser in the result of the appraisal report, therefore he will complete his work with impartiality and independence, regardless for whom the appraisal is created.
Myth: Market value will approximate replacement cost.
Fact: The way market value is arrived at is based on what a home buyer would likely pay a willing seller for a home without being under duress from any outside party to purchase or sell. Replacement cost is the dollar amount required to reconstruct a house in-kind.
Myth: Appraisers use a formula, such as a certain price per square foot, to come to the worth of a house.
Fact: There are many numerous methods that an appraiser will use to make a detailed analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to certain facilities and the cost of recently sold comparable houses.
Myth: In a strong economy - when the costs of homes in a given county are reported to be appreciating by a particular percentage - the prices of individual houses in the area can be expected to rise by that same percentage.
Fact: Worth increase of a specific property has to be determined on a case-by-case basis, factoring in data on comparable properties and other relevant elements. It doesn't matter if the economy is doing well or declining.
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Myth: The house's exterior is determinate of the actual price of the property; there is no need to do an interior appraisal.
Fact: Home value is concluded by a number of factors, including location, condition, improvements, amenities, and market trends. An exterior inspection obviously can't provide all of the data needed.
Myth: Since you're the one coughing up the cash for the appraisal report when applying for your loan to buy or refinance your house, you own the produced appraisal report.
Fact: The report is, in fact, legally owned by the lending agency - unless the lender "relinquishes its interest" in the report. Home buyers must be supplied with a version of the report through request as per the Equal Credit Opportunity Act.
Myth: There's no reason for consumers to even worry about what the report contains so long as their lending agency is fine with the contents therein.
Fact: Only if home buyers read 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, as it contains an exorbitant amount of information - 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 proximity.
Myth: The only reason someone would order an appraisal is if a home needs its worth estimated in a lender sales transaction.
Fact: Based upon their qualifications and designations, appraisers can and may perform a series of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal report is the same as a home inspection report.
Fact: Appraisal reports have almost nothing in common with a home inspection. The purpose of the appraiser is to form an opinion of value in the appraisal process and through creating the report. A home inspector analyzes the condition of the house and its major components and reports their findings.