Appraisal myths & facts
Legally, a real estate appraiser must be state certified to perform legitimate appraisal reports for federally-related purchase. You are also entitled by law to acquire a copy of the finished report from your lender. Contact our professional staff if you have any concerns about the appraisal process.
Myth: Market value must be similar to the assessed value of the property.
Fact: While most states support the concept that assessed value approximates estimated market value, this often is not the case. Examples include when interior remodeling has happened and the assessor has not seen the improvements, or when properties in the area have not been reassessed for an extended period.
Myth: The opinion of value of a house will vary depending upon whether the appraisal is ordered for the buyer or the seller.
Fact: The appraiser has no vested interest in the result of the report and should render his job with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: The replacement value of the home is always is on par with the market value.
Fact: Without any suggestion from any external parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a particular home. The dollar amount required to reconstruct a home is what forms the replacement cost.
Myth: Appraisers use a formula, such as a specific price per square foot, to come to the worth of a home.
Fact: An appraisal report is an assertion of data based on the home's size, location, proximity to undesirable facilities, the condition of the property and the cost of recent comparable sales. You can count on ELP Appraisals, LLC's appraisers to be honest in assessing this data.
Myth: In a strong economy - when the sales prices of houses in a given county are found to be appreciating by a certain percentage - the prices of individual properties in the vicinity can be expected to rise by that same percentage.
Fact: Price appreciation of a certain property is always determined on an individualized basis, factoring in data on comparable properties and other relevant specifications within the home itself. It doesn't matter if the economy is doing well or declining.
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Myth: Just examining what the property looks like on the outside gives an idea of its cost.
Fact: House worth is determined by a multitude of variables, including - but not limited to - location, condition, improvements, amenities, and market trends. There's no real way to get all of this information from just viewing the home from the exterior.
Myth: Because the consumer is the person who puts up the funding to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report is theirs.
Fact: Legally, the appraisal is owned by the lending company unless the lender relinquishes their interest in the report. Due the Equal Credit Opportunity Act, any home buyer demanding a copy of the report must be given one by their lending company.
Myth: Home buyers need not be concerned with what is in their appraisal document so long as it satisfies the necessities of their lending agency.
Fact: Only if home buyers check out a copy of their appraisal can they double-check its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of information contained in an report that will probably 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: Appraisers are hired only to assess real estate property values in property sales involving mortgage-lending transactions.
Fact: Depending upon their qualifications and designations, appraisers can and may provide a variety of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A house inspection serves the same purpose as an appraisal.
Fact: Appraisal reports are completely different than a home inspection report. The task of the appraiser is to conclude an opinion of value in the appraisal process and through creating the report. House inspectors will write a report that will express the condition of the property and its major components and possible damage.