Myth: The value that is assessed by the appraiser is required to be exactly the same as the market value.
Reality: This is not often the case; most states do support the concept that the assessed value is the same as market value, but not always.
Interior reconstruction that the assessor has not investigated and a lack of reassessment on nearby houses are prime examples of why the price can vary.
Myth: Depending on if the appraisal is written for the buyer or the seller, the opinion of value of the property will vary.
Reality: The appraiser has no vested interest in the result of the appraisal and should conduct his task with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: Market value will mirror replacement cost.
Reality: Without any influence from any different parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a specific property.
Replacement cost is the dollar amount needed to rebuild a property in-kind.
Myth: Certain formulae, like the price per square foot of the property, are what appraisers use to come to the value of a home.
Reality: There are many differing ways that an appraiser will use to make a detailed investigation of every factor in consideration of the house, such as the size, location, condition, how close it is to undesirable facilities and the values of recently sold comparable homes.
Myth: When the economy is robust and the sales prices of properties are found to be increasing by a certain percentage, the other homes in the vicinity can be expected to appreciate based on that same percentage.
Reality: An increase in value of a specific house is always concluded on a case-by-case basis, factoring in information on comparable homes and other relevant elements.
This is true in excellent economic times as well as poor.
Myth: You can usually tell what a property is worth simply by looking at the exterior.
Reality: To conclude an accurate value beyond all doubt, an appraiser must assess the home on a variety of factors based on area, condition, improvements, amenities, and current market trends.
There's no real way to get all of this data from just examining the home from the exterior.
Myth: Since you're the one coughing up the cash for the appraisal report when applying for the loan to purchase or refinance real estate, you own the ordered appraisal.
Reality: The document is, in fact, legally owned by the lender - unless the lender "releases its interest" in the document.
By the Equal Credit Opportunity Act, any consumer demanding a copy of the appraisal report must be provided with one by their lending agency.
Myth: Consumers need not be concerned with what is in their appraisal document so long as it meets the requirements of their lending group.
Reality: A home buyer should definitely look through their document; there could be some questions or some concerns about the accuracy of the appraisal report that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make.
Also, the appraisal report makes a near perfect record for future reference, comprised of useful and often-revealing information - including 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: Appraisals are ordered only to assess real estate property values in house sales involving mortgage-lending transactions.
Reality: Appraisers can have many varied qualifications and designations which allow them to perform a lot of different services including - but definitely not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: There's no need to get an appraisal if you have had a home inspection.
Reality: Appraisal reports are completely different than a home inspection report.
The reason behind an appraisal report is to find an opinion of market value during the appraisal process and the production of the report.
House inspectors will write a report that will explain the condition of the home and its major components and possible damage.
