Myth: Assessed value should always be equal to market value.
Reality: While most states uphold the idea that assessed value equates estimated market value, this often is not the case.
Examples include when interior reconstruction has happened and the assessor has not seen the improvements, or when properties in the vicinity have not been reassessed for an prolonged period.
Myth: The buyer or the seller can have some pull in the value of the house depending upon for whom the appraiser is working.
Reality: There is no vested interest on the part of the appraiser in the result of the appraisal, therefore he will conduct his work with impartiality and independence, despite of for whom the appraisal is created.
Myth: Any time market value is determined, it should match the replacement cost of the house.
Reality: Without any influence from any different parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific home.
The replacement cost is the dollar amount needed to reconstruct a home in-kind.
Myth: There are certain ways that appraisers use to find the opinion of value of a property, such as the price per square foot.
Reality: Appraisers make an exhaustive analysis of all factors pertaining to the value of a home, including its location, condition, size, proximity to facilities and recent values of comparable properties.
Myth: As properties appreciate by a specific percentage - in a robust economic state - the houses in proximity are expected to appreciate by the same amount.
Reality: Any value an appraiser derives concerning a specific house is always individualized, based on certain factors derived from the information of comparable properties and other specifications within the property itself.
This is true in strong economic times as well as poor.
Myth: Just seeing what the property looks like on its exterior gives an idea of its value.
Reality: There are a number of different variables that determine the value of a house; these factors include location, condition, improvements, amenities, and market trends.
As you can see, none of these variables can be derived simply by inspecting the property from the exterior.
Myth: Because consumers pay for appraisals when applying for loans to purchase or refinance their home, they own their appraisal.
Reality: Unless a lender releases its interest in the document, it is legally owned by the lending company that ordered the appraisal.
Due the Equal Credit Opportunity Act, any consumer demanding a copy of the appraisal report must be given it by their lender.
Myth: It doesn't matter to consumers what's in the appraisal report so long as it satisfies the needs of their lender.
Reality: A home buyer should definitely inspect their report; there could be some questions or some concerns about the accuracy of the analysis that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make.
Also, the appraisal makes a near perfect record for future reference, filled with useful 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 vicinity.
Myth: There is no reason to hire an appraiser unless you are trying to get an assessment of the value of a property during a sales transaction involving a lender.
Reality: Appraisers can have many varied qualifications and designations which allow them to perform a variety of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: You shouldn't need to get an appraisal if you have had a home inspection.
Reality: A home inspection report has a completely different purpose than an appraisal report.
The reason behind an appraisal is to form an opinion of market value during the appraisal process and the completion of the report.
The task of a home inspector is to determine the condition of the property and its main components, then compose a report on these findings.
