Myth: Assessed value generally will be equal to market value.
Reality: While most states uphold the suggestion that assessed value equates estimated market value, this often is not the case.
Interior reconstruction that the assessor is not aware of and a lack of reassessment on nearby houses are perfect examples of why the price can vary.
Myth: Depending on whether the appraisal is drawn up for the buyer or the seller, the cost of the house will vary.
Reality: There is no vested interest on the part of the appraiser in the outcome of the appraisal report, therefore he will complete his work with impartiality and independence, despite of for whom the appraisal is created.
Myth: Market value should equate to replacement cost.
Reality: The way market value is derived is based on what a buyer would be willing to pay a willing seller for a house without being under pressure from any outside group to buy or sell.
If the home were reconstructed, the dollar amount necessary to do so would be the replacement cost.
Myth: There are specific methods that appraisers use to show the value of a house, such as the price per square foot.
Reality: There are many differing formulae that an appraiser will use to make a comprehensive analysis of every factor pertaining to the home, such as the size, location, condition, how close it is to specific facilities and the sales prices of recently sold comparable properties.
Myth: As properties increase in value by a certain percentage - in a robust economy - the homes nearby are figured to increase by the same amount.
Reality: All appreciation of value is on a case-by-case basis, concluded by data on relevant considerations and the data of comparable houses.
This is true in robust economic times as well as poor.
Myth: Just looking at what the house looks like on its exterior gives an excellent idea of its value.
Reality: Home value is concluded by a number of factors, including - but not limited to - location, condition, improvements, amenities, and market trends.
As you can see, none of these factors can be derived simply by inspecting the home from the exterior.
Myth: Since you're the one providing the money for the appraisal report when applying for the loan to buy or refinance real estate, you own the ordered appraisal.
Reality: The appraisal report is, in fact, legally owned by the lender - unless the lender "releases its interest" in the appraisal report.
However, consumers must be supplied with a copy of the document upon written request, because of the Equal Credit Opportunity Act.
Myth: Home buyers need not worry about what is in their appraisal report so long as it exceeds the requirements of their lending group.
Reality: A consumer should definitely read through their appraisal report; there could be some questions or some worries with the accuracy of the analysis that should be addressed. 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, containing a great deal of information - including, but certainly 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 vicinity.
Myth: The only reason someone would order an appraisal is if a house needs its value assessed in a lender sales transaction.
Reality: Appraisers can have many different qualifications and designations which allow them to perform a multitude 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 home inspection serves the same purpose as an appraisal.
Reality: A home inspection report has a completely different purpose than an appraisal.
The task of the appraiser is to conclude an opinion of value in the appraisal process and through producing the report.
House inspectors will produce a report that will show the condition of the property and its major components and possible damage.
