Appraisal myths debunked
Legally, a real estate appraiser is required to be state certified to perform substantiated real estate appraisals for federally-related transactions. You also have the right to acquire a copy of the finished appraisal from your lending agency. Contact our professional staff if you have any questions about the appraisal process.
Myth: Market value will be equivocal to the assessed value of the property.
Fact: It could be that California, like most states, supports the suggestion that the assessed value is no different from the market value; however, this is not often the case. Examples include when interior reconstruction has happened and the assessor does not know about the improvements, or when homes in the vicinity have not been reassessed for an extended time.
Myth: The opinion of value of a home will change depending upon whether the appraisal is ordered for the buyer or the seller.
Fact: The appraiser has no personal interest in the outcome of the appraisal report and should complete his task with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: Market value should equal replacement cost.
Fact: The way market value is found is based on what a home buyer would likely pay a willing seller for a house without being under pressure from any external group to purchase or sell. If the home were rebuilt, the dollar amount necessary to do so would make up the replacement cost.
Myth: Specific formulae, like the price per square foot of the property, are what appraisers use to ascertain the worth of a property.
Fact: There are many numerous processes that an appraiser will use to make a full investigation of every factor in consideration of the house, such as the size, location, condition, how close it is to certain facilities and the opinion of value of recently sold comparable houses.
Myth: As properties appreciate by a specific percentage - in a strong economic state - the houses around the appreciating properties are expected to increase by the same amount.
Fact: Any value at which an appraiser concludes concerning a specific home is always personalized, based on certain factors concluded from the data of comparable houses and other specifications within the property itself. This is true in strong economic times as well as bad.
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Myth: The home's outside is determinate of the actual price of the house; it is unnecessary to do an interior inspection.
Fact: To conclude an accurate value beyond all doubt, an appraiser must examine the home on a variety of factors based on location, condition, improvements, amenities, and market trends. As you can see, none of these variables can be derived just by examining the house from the exterior.
Myth: Because the consumer is the one who provides the funding to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal is theirs.
Fact: Unless a lender releases its interest in the appraisal report, it is legally owned by the lending company that purchased the appraisal. By the Equal Credit Opportunity Act, any home buyer demanding a copy of the appraisal report must be provided with one by their lending agency.
Myth: There's no reason for consumers to even concern themselves with what the appraisal report contains so long as their lending company is fine with the contents therein.
Fact: It is a very good idea for consumers to check over a copy of their appraisal report so that they can verify the accuracy of the report, in case there is a need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of information contained in an appraisal that can 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 house needs its price assessed in a lender-based sales transaction.
Fact: Depending upon their qualifications and designations, appraisers can and do perform a series of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: There's no need to get an appraisal if you have had a home inspection.
Fact: Appraisal reports are definitely not the same as a home inspection report. The function of an appraisal report is to form an opinion of fair market value during the appraisal process and the completion of the report. A home inspector assesses the condition of the home and its main components and reports their findings.
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