Myth: Assessed value should be the same as market value.
Reality: While most states support the concept that assessed value is the same as estimated market value, this usually is not the case.
Interior reconstruction that the assessor is unaware of and a dearth of reassessment on nearby properties are excellent examples of why this occurs.
Myth: Depending on whether the appraisal is provided for the buyer or the seller, the appraised value of the property will vary.
Reality: The cost of the home does not affect the salary of the appraiser; due to this, the appraiser has no personal interest in the value of the home. Obviously, he will complete his job with impartiality and independence regardless of for whom the appraisal is provided.
Myth: The replacement value of the home will be on par with the market value.
Reality: The way market value is found is based on what a home buyer would be willing to pay a willing seller for a house without being under influence from any external group to purchase or sell.
The dollar amount required to rebuild a home is what forms the replacement cost.
Myth: There are certain methods that appraisers use to determine the opinion of value of a property, like the price per square foot.
Reality: There are many differing methods that an appraiser will use to make a full investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to certain facilities and the sales prices of recently sold comparable properties.
Myth: When the economy is doing well and the sales prices of homes are reported to be appreciating by a certain percentage, the other houses in the proximity can be expected to rise based on that same percentage.
Reality: Any value an appraiser reports concerning a certain house is always personalized, based on certain factors derived from the data of comparable houses and other considerations within the house itself.
It doesn't matter if the economy is on the rise or declining.
Myth: Just seeing what the property looks like on its exterior gives a good idea of its value.
Reality: There are a number of different factors that show property value; these factors include location, condition, improvements, amenities, and market trends.
Obviously, none of these things can be derived simply by inspecting the home from the outside.
Myth: Since you're the one providing the money for the appraisal report when applying for your loan to purchase or refinance your house, you own the provided appraisal.
Reality: Legally, the appraisal is owned by the lending agency unless the lender releases their interest in the document.
Consumers have to be supplied with a copy of the document through request as per the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the appraisal report so long as it satisfies the necessities of their lender.
Reality: It is very important for home buyers to go through a copy of their report so that they can verify the accuracy of the document, in case it's required to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make.
An appraisal report can double as a record for the future, as it contains a great deal of information - 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 area.
Myth: Appraisers are hired only to estimate building values in house sales involving mortgage-lending deals.
Reality: Depending upon their qualifications and designations, appraisers can and often do perform a multitude of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A property inspection serves the same purpose as an appraisal.
Reality: An appraisal report does not fulfill the same purpose as an inspection.
The reason behind an appraisal report is to form an opinion of market value during the appraisal process and the production of the appraisal report.
A home inspector analyzes the condition of the building and its major components and reports their findings.