Appraisal myths & facts
By law, an appraiser must be state-licensed to produce appraisals for federally-related purchases. You also have the right to demand a copy of the completed report from your lender. Contact us if you have any concerns about the appraisal process.
Myth: The value that is assessed by the appraiser is required to be exactly the same as the market value.
Fact: It is possible that California, like most states, validates the suggestion that the assessed value is the same as the market value; however, this is not often the case. Often when interior remodeling has been done and the assessor is not aware of the improvement or other homes in the area have not been reassessed for a good length of time, it may vary wildly.
Myth: Depending on whether the appraisal is ordered for the buyer or the seller, the cost of the property will vary.
Fact: There is no personal interest on the part of the appraiser in the outcome of the report, therefore he will conduct his work with impartiality and independence, despite for whom the appraisal is created.
Myth: Market value will be the same as replacement cost.
Fact: Market value is acquired by what a willing buyer would likely pay a willing seller for a specific home, with neither being under duress to buy or sell. Replacement value is the dollar amount needed to reconstruct a house in-kind.
Myth: Specific methods, like the price per square foot, are what appraisers use to arrive at the worth of a house.
Fact: There are many numerous methods that an appraiser will use to make an in-depth investigation of every factor pertaining to the property, such as the size, location, condition, how close it is to certain facilities and the sales price of recently sold comparable properties.
Myth: As properties increase their worth by a specific percentage - in a strong economy - the homes around the appreciating properties are expected to appreciate by the same amount.
Fact: All appreciation of worth is on a case-by-case basis, found by data on relevant conditions and the data of comparable houses. It makes no difference if the economy is excellent or on the decline.
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Myth: You can often see what a house is worth simply by looking at the outside.
Fact: Property worth is concluded by a number of factors, including - but not limited to - area, condition, improvements, amenities, and market trends. An exterior inspection obviously can't provide all of the data necessary.
Myth: Since the consumer is the party who puts up the money to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal report belongs to them.
Fact: The appraisal is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the appraisal report. However, consumers have to be given a copy of the appraisal upon written request, through the Equal Credit Opportunity Act.
Myth: Home buyers need not care about what is in their report so long as it meets the necessities of their lending institution.
Fact: Only if home buyers examine a copy of their appraisal can they double-check its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes a valuable record for future reference, comprised of helpful and often-revealing 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 area.
Myth: The only reason someone would hire an appraiser is if a house needs its cost estimated in a lender-based sales transaction.
Fact: Depending upon their qualifications and designations, appraisers can and often do perform a series of different 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.
Fact: A home inspection serves a completely different purpose than an appraisal report. The job of the appraiser is to form an opinion of value in the appraisal process and through writing the report. A home inspector assesses the condition of the property and its major components and reports these findings.
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