Myth: Market value should be the same as the assessed value of the property.
Reality: While most states back the concept that assessed value is equal to estimated market value, this often is not the case.
Examples include when interior reconstruction has happened and the assessor has not seen the improvements, or when homes in the area have not been reassessed for an prolonged time.
Myth: Depending on whether the appraisal is drawn up for the buyer or the seller, the cost of the property will vary.
Reality: There is no personal interest on the part of the appraiser in the outcome of the analysis, therefore he will conduct his work with impartiality and independence, despite of for whom the appraisal is created.
Myth: Market value will be the same as replacement cost.
Reality: Without any influence from any different parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific property.
The dollar amount needed to rebuild a house is what forms the replacement cost.
Myth: Certain formulae, like the price per square foot of the property, are the methods appraisers use to come to the value of a home.
Reality: There are many varied formulae that an appraiser will use to make a full analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to certain facilities and the values of recently sold comparable homes.
Myth: When the economy is doing well and the sales prices of houses are found to be increasing by a certain percentage, the other homes in the vicinity can be expected to rise based on that same percentage.
Reality: The appreciation of a specific home must be concluded on a case-by-case basis, factoring in data on comparable houses and other relevant considerations.
This is true in strong economic times as well as bad.
Myth: The home's outside is determinate of the expected price of the property; there is no need to do an interior inspection.
Reality: There are a multitude of different variables that conclude the value of a house; these factors include location, condition, improvements, amenities, and market trends.
There's no possible way to get all of this information from just examining the property 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 home, you own the produced appraisal report.
Reality: Legally, the appraisal report is owned by the lending company unless the lender relinquishes their interest in the appraisal.
However, home buyers must be given a copy of the report upon written request, under the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the appraisal so long as it satisfies the needs of their lender.
Reality: Only when consumers check out a copy of their report can they verify its accuracy and know if they should ask questions. 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 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 area.
Myth: Appraisals are ordered only to assess home values in house sales involving mortgage-lending transactions.
Reality: Depending upon their qualifications and designations, appraisers can and do perform a variety of 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.
Reality: Appraisal reports are completely different than a home inspection report.
The appraiser forms an opinion of value in the appraisal process and resulting appraisal report.
House inspectors will produce a report that will show the condition of the house and its major components and possible damage.