Myth: Market value has to be equivocal to the assessed value of the property.
Reality: 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 reconstruction that the assessor is not aware of and a dearth of reassessment on nearby properties are excellent examples of why this occurs.
Myth: The buyer or the seller will have leverage in the cost of the home depending upon for whom the appraiser is working.
Reality: There is no real interest on the part of the appraiser in the outcome of the appraisal, therefore he will conduct his work with impartiality and independence, despite of for whom the appraisal is created.
Myth: Market value should equate to replacement cost.
Reality: Market value is based on what a willing buyer would likely pay a willing seller for a particular house, with neither being under undue influence to buy or sell.
Replacement cost is the dollar amount required to reconstruct a house in-kind.
Myth: Certain methods, such as the price per square foot of the property, are the methods appraisers use to ascertain the value of a property.
Reality: There are many varied formulae that an appraiser will use to make a comprehensive investigation of every factor in consideration of the home, such as the size, location, condition, how close it is to certain facilities and the sales prices of recently sold comparable homes.
Myth: In a powerful economy - when the values of homes in a given area are found to be increasing by a particular percentage - the values of individual homes in the vicinity can be expected to increase by that same percentage.
Reality: An increase in value of a specific property must be concluded on an individualized basis, factoring in data on comparable homes and other relevant specifications within the home itself.
This is true in strong economic times as well as poor.
Myth: The property's outside is determinate of the expected price of the property; it is unnecessary to do an interior inspection.
Reality: To find an accurate value beyond all doubt, an appraiser must inspect the property on a variety of factors based on location, condition, improvements, amenities, and market trends.
An external inspection obviously can't provide all of the data needed.
Myth: Since you're the one paying for the appraisal report when applying for your loan to purchase or refinance real estate, you own the produced appraisal report.
Reality: Unless a lender releases its interest in the report, it is legally owned by the lending company that purchased the appraisal.
However, consumers have to be supplied with a copy of the report upon written request, due to the Equal Credit Opportunity Act.
Myth: There's no point for home buyers to even worry about what the report contains so long as their lending institution is satisfied.
Reality: A consumer should definitely inspect their report; there may be some questions or some concerns with the accuracy of the analysis that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make.
An appraisal can serve as a record for the future, containing an incredible amount of information - 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 vicinity.
Myth: Appraisers are hired only to assess building values in house sales involving mortgage-lending transactions.
Reality: Hiring an appraiser can fulfill a variety of requirements depending on the designations and certifications of the appraiser involved; appraisers can perform a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: A house inspection serves the same purpose as an appraisal.
Reality: An appraisal does not serve the same purpose as an inspection.
The purpose of the appraiser is to find an opinion of value in the appraisal process and through producing the report.
A home inspector determines the condition of the property and its major components and reports these findings.