Myth: Assessed value generally will be equal to market value.
Reality: While most states uphold the suggestion that assessed value is equal to estimated market value, this generally is not the case. Often when interior remodeling has occurred and the assessor is unaware of the improvement or other houses in the area have not been reassessed for quite a while, it may vary widely.
Myth: Depending on if the appraisal is produced for the buyer or the seller, the opinion of value of the house will vary.
Reality: There is no personal interest on the part of the appraiser in the result of the appraisal, therefore he will complete his work with impartiality and independence, regardless of for whom the appraisal is ordered.
Myth: Any time market value is calculated, it should equal the replacement cost of the property.
Reality: Market value is acquired by what a willing buyer would likely pay a willing seller for a specific home, with neither being under duress to buy or sell. The dollar amount required to reconstruct a house is what shows the replacement cost.
Myth: Appraisers use a formula, such as a certain price per square foot, to conclude the value of a property.
Reality: There are many varied calculations that an appraiser will use to make a full analysis of every factor pertaining to the house, such as the size, location, condition, how close it is to specific facilities and the values of recently sold comparable homes.
Myth: When the economy is doing well and the sales prices of houses are reported to be appreciating by a certain percentage, the other properties in the proximity can be expected to rise based on that same percentage.
Reality: All appreciation of value is on an individual basis, concluded by information on relevant conditions and the data of comparable houses. This is true in strong economic times as well as poor.
Myth: The home's exterior is determinate of the expected price of the home; there is no need to do an interior appraisal.
Reality: There are a number of different variables that determine the value of a house; these factors include area, condition, improvements, amenities, and market trends. Obviously, none of these variables can be found simply by viewing the home from the outside.
Myth: Since you're the one paying for the appraisal when applying for your loan to buy or refinance your house, you own the ordered appraisal report.
Reality: Legally, the report is owned by the lender unless the lender releases their interest in the appraisal. Because of the Equal Credit Opportunity Act, any consumer demanding a copy of the report must be provided with one by their lending agency.
Myth: It doesn't concern consumers what's in the appraisal report so long as it satisfies the needs of their lending agency.
Reality: A home buyer should definitely read through their appraisal report; there might be some questions or some worries about the accuracy of the analysis that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of data stored in an appraisal report that should be useful to the home buyer in the future, such as 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: The only reason someone would hire an appraiser is if a house needs its value estimated in a lender sales transaction.
Reality: Depending upon their qualifications and designations, appraisers can and do provide a variety of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: There's no reason to get an appraisal if you get a home inspection.
Reality: An appraisal does not serve the same purpose as an inspection report. The point of an appraisal is to form an opinion of market value during the appraisal process and the completion of the appraisal. A home inspector determines the condition of the house and its main components and reports these findings.
