Myth: Market value will always be equivocal to the assessed value of the property.
Reality: While most states support the suggestion that assessed value is equal to estimated market value, this commonly is not the case. Examples include when interior reconstruction has happened and the assessor does not know about the improvements, or when houses in the vicinity have not been reassessed for an prolonged time.
Myth: The buyer or the seller sometimes may have some pull in the cost of the house depending upon for whom the appraiser is working.
Reality: There is no personal interest on the part of the appraiser in the result of the appraisal, therefore he will complete his work with impartiality and independence, no matter of for whom the appraisal is created.
Myth: Any time market value is determined, it should be the same as the replacement cost of the property.
Reality: Without any pressure from any different parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a particular property. The dollar amount necessary to rebuild a home is what constitutes the replacement cost.
Myth: Appraisers use a formula, like a certain price per square foot, to come to the value of a house.
Reality: There are many differing processes that an appraiser will use to make a full analysis of every factor pertaining to the house, such as the size, location, condition, how close it is to undesirable facilities and the values of recently sold comparable houses.
Myth: In a powerful economy - when the sales prices of homes in a given neighborhood are reported to be increasing by a particular percentage - the prices of individual houses in the proximity can be expected to appreciate by that same percentage.
Reality: Any value an appraiser reports concerning a particular property is always personalized, based on certain factors found from the data of comparable properties and other considerations within the home itself. This is true in excellent economic times as well as poor.
Myth: Just examining what the property looks like on the outside gives a good idea of its value.
Reality: There are a number of different factors that determine the value of a home; these factors include area, condition, improvements, amenities, and market trends. An outside-only inspection obviously can't provide all of the data necessary.
Myth: Since you're the one paying for the appraisal report when applying for your loan to buy or refinance real estate, you own the provided appraisal.
Reality: The document is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the document. Home buyers have to be supplied with a version of the document through request due to the Equal Credit Opportunity Act.
Myth: It doesn't concern consumers what's in the report so long as it meets the needs of their lending company.
Reality: It is a very good idea for consumers to look at a copy of their report so that they can verify the accuracy of the report, in case there is a need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of information stored in an appraisal that could 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: There is no reason to order an appraisal unless you are trying to get an estimate of the value of a home during a sales transaction involving a lending agency.
Reality: Appraisers can have many different qualifications and designations which allow them to perform a lot of different services including - but definitely not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: A house inspection serves the same purpose as an appraisal.
Reality: An appraisal does not fulfill the same purpose as an inspection report. The purpose of the appraiser is to arrive at an opinion of value in the appraisal process and through producing the report. A home inspector assesses the condition of the property and its main components and reports their findings.
