Myth: Assessed value will always equate 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 remodeling that the assessor is not aware of and a dearth of reassessment on nearby properties are exact examples of why the price can vary.
Myth: The value of a property will be different depending upon if the appraisal is ordered for the buyer or the seller.
Reality: The appraiser has no vested interest in the outcome of the appraisal and should complete his task with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Any time market value is determined, it should match the replacement cost of the property.
Reality: Without any pressure from any different parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific home.
The dollar amount required to rebuild a house is what shows the replacement cost.
Myth: Appraisers use a formula, such as a specific price per square foot, to figure out the value of a house.
Reality: There are many different formulae that an appraiser will use to make a comprehensive investigation of every factor in consideration of the house, such as the size, location, condition, how close it is to specific facilities and the values of recently sold comparable homes.
Myth: As homes appreciate by a specific percentage - in a robust economy - the homes nearby are expected to appreciate by the same amount.
Reality: The appreciation of a specific house has to be determined on a case-by-case basis, factoring in information on comparable houses and other relevant considerations.
This is true in robust economic times as well as bad.
Myth: Just examining what the house looks like on its exterior gives an idea of its value.
Reality: There are a number of different factors that conclude property value; these factors include location, condition, improvements, amenities, and market trends.
An outside-only inspection obviously can't provide all of the data necessary.
Myth: Since the consumer is the person who provides the capital to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal is theirs.
Reality: Legally, the appraisal report is owned by the lending company unless the lender releases their interest in the document.
However, home buyers must be provided with a copy of the report upon written request, through the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the report so long as it satisfies the necessities of their lender.
Reality: A home buyer should definitely inspect their appraisal report; there might be some questions or some worries with the accuracy of the appraisal report that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make.
Also, the appraisal report makes an excellent record for future reference, containing 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: The only reason someone would order an appraisal is if a home needs its value assessed in a lender-based sales transaction.
Reality: Depending upon their qualifications and designations, appraisers can and often do perform a variety of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: You shouldn't need to get an appraisal if you get a home inspection.
Reality: A home inspection report serves a completely different purpose than an appraisal report.
The purpose of an appraisal is to find an opinion of market value during the appraisal process and the production of the appraisal.
A home inspector determines the condition of the house and its major components and reports their findings.
