Myth: The value that is ascertained by the appraiser should be exactly the same as the market value.
Reality: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always.
Interior remodeling that the assessor is not aware of and a lack of reassessment on nearby homes are excellent examples of why this occurs.
Myth: The value of a home will change depending upon if the appraisal is ordered for the buyer or the seller.
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, regardless of for whom the appraisal is created.
Myth: Market value will equal replacement cost.
Reality: The way market value is derived is based on what a buyer would be willing to pay a willing seller for a home without being under pressure from any outside party to buy or sell.
The replacement cost is the dollar amount required to rebuild a house in-kind.
Myth: Certain formulae, like the price per square foot of the property, are the ways appraisers use to ascertain the value of a house.
Reality: Appraisers make a comprehensive analysis of all factors pertaining to the value of a property, including its location, condition, size, proximity to facilities and recent values of comparable properties.
Myth: When the economy is robust and the sales prices of homes are reported to be appreciating by a certain percentage, the other properties in the neighborhood can be expected to appreciate based on that same percentage.
Reality: Any value an appraiser reports in regards to a specific property is always individualized, based on certain factors concluded from the information of comparable houses and other considerations within the house itself.
It makes no difference whether the economy is excellent or on the decline.
Myth: You can often find what a house is worth simply by looking at the outside.
Reality: Home value is concluded by a multitude of variables, including - but not limited to - area, condition, improvements, amenities, and market trends.
Obviously, none of these factors can be found simply by inspecting the house from the outside.
Myth: Because the consumer is the one who provides the capital to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal report is theirs.
Reality: Unless a lending agency releases its interest in the report, it is legally owned by the lending agency that ordered the appraisal.
Under the Equal Credit Opportunity Act, any home buyer asking for a copy of the document must be given one by their lender.
Myth: It doesn't matter to consumers what's in the appraisal report so long as it satisfies the requirements of their lending company.
Reality: Only when consumers read a copy of their report can they double-check its accuracy and know if they should ask questions. Remember, this is probably the most expensive and important investment a consumer will ever make.
Also, the report makes a valuable record for future reference, filled with helpful and often-revealing data - 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 proximity.
Myth: There is no reason to order an appraisal unless you are trying to get an estimate of the value of a property during a sales transaction involving a lending company.
Reality: Based upon their qualifications and designations, appraisers can and may perform a variety of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal report is no different than a home inspection.
Reality: Appraisal reports are nothing like a home inspection.
The appraiser forms an opinion of value in the appraisal process and resulting report.
A home inspector analyzes the condition of the building and its main components and reports these findings.
