Appraisal myths & facts
By law, an appraiser needs to be state-licensed to perform appraisals for federally-backed purchases. The law gives you the right to receive a copy of your finished appraisal from your lending agency after it has been provided. Contact us if you have any concerns about the appraisal process.
Myth: Market value needs to be similar to the assessed value of the property.
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. Interior remodeling that the assessor has not investigated and a dearth of reassessment on nearby houses are perfect examples of why this occurs.
Myth: The buyer or the seller sometimes may have some pull in the value of the house depending upon for whom the appraiser is working.
Fact: There is no personal interest on the part of the appraiser in the outcome of the analysis, therefore he will conduct his work with impartiality and independence, regardless for whom the appraisal is created.
Myth: Any time market value is established, it should equal the replacement cost of the house.
Fact: The way market value is arrived at is based on what a home buyer would be willing to pay a willing seller for a house without being under influence from any outside party to buy or sell. Replacement value is the dollar amount required to reconstruct a home in-kind.
Myth: There are specific ways that real estate appraisers use to find the cost of a home, like the price per square foot.
Fact: There are many numerous formulae that an appraiser will use to make a comprehensive investigation of every factor pertaining to the house, such as the size, location, condition, how close it is to undesirable facilities and the sales price of recently sold comparable houses.
Myth: As houses appreciate by a certain percentage - in a strong economic state - the homes nearby are expected to increase by the same amount.
Fact: Worth increase of a specific house is always determined on a case-by-case basis, factoring in data on comparable homes and other relevant considerations. It doesn't matter if the economy is on the rise or declining.
Have other questions about appraisers, appraising or real estate in Los Angeles County or Woodland Hills, CA?Contact us
Myth: You can commonly see what a house is worth simply by looking at the exterior.
Fact: House value is concluded by a multitude of factors, including area, condition, improvements, amenities, and market trends. As you can see, none of these factors can be derived simply by looking at the home from the outside.
Myth: Since you're the one providing the money for the appraisal when applying for the loan to buy or refinance real estate, you own the produced appraisal report.
Fact: Unless a lending agency releases its vestment in the report, it is legally owned by the lending agency that ordered the appraisal. However, home buyers must be supplied with a copy of the appraisal report upon written request, through the Equal Credit Opportunity Act.
Myth: There's no reason for consumers to even worry about what the appraisal report contains so long as their lender is satisfied.
Fact: It is very important for consumers to check over a copy of their appraisal so that they can verify the accuracy of the document, in case it's required to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of data stored in an appraisal report 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 vicinity.
Myth: The only reason someone would order an appraisal is if a home needs its worth assessed in a lender sales transaction.
Fact: Hiring an appraiser can fulfill a variety of necessities 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: An appraisal is the same as a home inspection.
Fact: An appraisal report does not fulfill the same purpose as an inspection. The point 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 compose a report that will explain the condition of the home and its major components and possible damage.