Appraisal myths & facts
Legally, a real estate appraiser is required to be state certified to write legitimate appraisal reports for federally-backed purchase. You are also entitled by law to receive a copy of the completed appraisal from your lender. Contact Magee Appraisal Service if you have any concerns about the appraisal process.
Myth: The value that is ascertained by the appraiser must be exactly the same as the market value.
Fact: This usually isn't true; 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 homes are prime examples of why there might be a differential in price.
Myth: The buyer or the seller sometimes may have impact in the cost of the house depending upon for whom the appraiser is working.
Fact: The value of the house does not affect the pay of the appraiser; as such, the appraiser has no vested interest in the cost of the property. What this means is he will conduct job with impartiality and objectivity regardless for whom the appraisal is conducted.
Myth: The replacement cost of the house is always is on par with the market value.
Fact: The way market value is found is based on what a buyer would be willing to pay a willing seller for a house without being under influence from any external party to purchase or sell. The dollar amount necessary to rebuild a house is what constitutes the replacement cost.
Myth: Specific methods, such as the price per square foot of the property, are what appraisers use to determine the cost of a home.
Fact: There are many different formulae that an appraiser will use to make an in-depth investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to certain facilities and the worth of recently sold comparable homes.
Myth: When the economy is strong and the value of homes are found to be increasing by a certain percentage, the other homes in the neighborhood can be expected to increase based on that same percentage.
Fact: Cost appreciation of a certain property is always concluded on a case-by-case basis, factoring in data on comparable homes and other relevant considerations. This is true in fair economic times as well as bad.
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Myth: Just examining what the property looks like on the outside gives an idea of its worth.
Fact: To find an accurate price beyond all doubt, an appraiser must assess the property on a variety of factors based on location, condition, improvements, amenities, and current market trends. Obviously, none of these factors can be found simply by examining the home from the exterior.
Myth: Since you're the one providing the money for the appraisal when applying for your loan to buy or refinance real estate, you own the provided appraisal report.
Fact: The appraisal is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the document. However, home buyers have to be supplied with a copy of the report upon written request, under the Equal Credit Opportunity Act.
Myth: It doesn't matter to consumers what's in the appraisal so long as it satisfies the needs of their lender.
Fact: It is very important for consumers to check over a copy of their appraisal report so that they can verify the accuracy of the document, 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. An appraisal can double as a record for the future, containing an exorbitant amount of data - including, but certainly 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: There is no reason to hire an appraiser unless you are trying to get an estimate of the worth of a house during a sales transaction involving a lender.
Fact: Hiring an appraiser can fulfill a variety of requirements 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 property inspection serves the same purpose as an appraisal.
Fact: A home inspection has a completely different purpose than an appraisal report. An appraiser finds an opinion of value in the appraisal process and resulting appraisal. House inspectors will write a report that will show the condition of the property and its major components and possible damage.