Common myths about appraising
Legally, a real estate appraiser is required to be state certified to write substantiated appraisal reports for federally-supported transactions. Also by law, you are entitled to receive a copy of the completed appraisal from your lender. Contact Cathy Bauer Appraisals, LLC if you have any concerns about the appraisal process.
Myth: Assessed value will always be the same as to market value.
Fact: 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. Examples include when interior reconstruction has happened and the assessor has not seen the improvements, or when houses in the area have not been reassessed for an prolonged period of time.
Myth: The buyer or the seller will have an influence in the cost of the home depending upon for whom the appraiser is working.
Fact: The appraiser has no vested interest in the outcome of the appraisal report and should render his task with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Market value should approximate replacement cost.
Fact: Market value is based on what a willing buyer would likely pay a willing seller for a certain house, with neither being under undue influence to buy or sell. Replacement cost is the dollar amount needed to rebuild a home in-kind.
Myth: Specific formulae, like the price per square foot, are the ways appraisers use to arrive at the price of a home.
Fact: Appraisers complete an exhaustive analysis of all factors in consideration to the value of a home, including its location, condition, size, proximity to facilities and recent sale prices of comparable homes.
Myth: In a strong economy - when the worth of homes in a given area are found to be appreciating by a certain percentage - the values of individual homes in the proximity can be expected to appreciate by that same percentage.
Fact: Any value at which an appraiser arrives concerning a particular home is always individualized, based on certain factors pulled from the information of comparable houses and other considerations within the home itself. This is true in strong economic times as well as bad.
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Myth: Just seeing what the house looks like on its exterior gives an idea of its value.
Fact: To conclude an accurate value beyond all doubt, an appraiser must inspect the house on a variety of factors based on area, condition, improvements, amenities, and market trends. An exterior inspection obviously can't provide all of the information needed.
Myth: Because consumers fund appraisals when applying for loans to purchase or refinance their home, they legally own their appraisal.
Fact: The appraisal report is, in fact, legally owned by the lender - unless the lender "releases its interest" in the appraisal. However, consumers must be supplied with a copy of the appraisal upon written request, due to the Equal Credit Opportunity Act.
Myth: It doesn't matter to consumers what's in the report so long as it satisfies the necessities of their lending agency.
Fact: Only if consumers look over a copy of their appraisal report can they ensure its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can double as a record for the future, containing an exorbitant amount of data - 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 proximity.
Myth: The only reason someone would hire an appraiser is if a property needs its value assessed in a lender sales transaction.
Fact: Appraisers can have many varied qualifications and designations which allow them to perform a series 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: An appraisal report is the same as a home inspection report.
Fact: Appraisal reports have almost nothing in common with a home inspection report. The appraiser concludes on an opinion of value in the appraisal process and resulting appraisal report. House inspectors will create a report that will show the condition of the home and its major components and possible damage.