Appraisal myths debunked
Legally, a real estate appraiser has to be state certified to create substantiated appraisal reports for federally-backed purchase. You also have the right to request a copy of the finished appraisal report from your lender. Contact our professional staff if you have any questions about the appraisal process.
Myth: Market value should be the same as the assessed value of the property.
Fact: It is probable that California, like most states, supports the idea that the assessed value is no different from the market value; however, this certainly varies based on state-to-state. Interior remodeling that the assessor has not investigated and a lack of reassessment on nearby homes are excellent examples of why this occurs.
Myth: The value of a house will change depending upon if the appraisal is produced for the buyer or the seller.
Fact: There is no vested interest on the part of the appraiser in the result of the appraisal, therefore he will conduct his work with impartiality and independence, regardless for whom the appraisal is written.
Myth: Market value should equate to replacement cost.
Fact: 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 party to buy or sell. The replacement cost is the dollar amount required to rebuild a home in-kind.
Myth: Specific formulae, such as the price per square foot of the property, are the ways appraisers use to come to the price of a home.
Fact: There are many differing calculations that an appraiser will use to make a detailed investigation of every factor in consideration of the home, such as the size, location, condition, how close it is to certain facilities and the opinion of value of recently sold comparable properties.
Myth: When the economy is strong and the cost of homes are reported to be increasing by a certain percentage, the other houses in the neighborhood can be expected to increase based on that same percentage.
Fact: Any value at which an appraiser arrives in regards to a certain house is always personalized, based on certain factors derived from the information of comparable properties and other specifications within the property itself. It doesn't matter if the economy is doing well or declining.
Have other questions about appraisers, appraising or real estate in Ventura County or Newbury Park, CA?Contact our professional staff
Myth: Just looking at what the house looks like on the outside gives an idea of its worth.
Fact: To determine an accurate worth beyond all doubt, an appraiser must inspect the property on a variety of factors based on area, condition, improvements, amenities, and market trends. There's no real way to get all of this data from simply looking at the property from the exterior.
Myth: Since you're the one paying for the appraisal when applying for the loan to buy or refinance your house, you own the ordered appraisal report.
Fact: The document is, in fact, legally owned by the lending company - unless the lender "relinquishes its interest" in the appraisal. By the Equal Credit Opportunity Act, any consumer requesting a copy of the appraisal report must be given it by their lender.
Myth: There's no reason for home buyers to even concern themselves with what the appraisal contains so long as their lending institution is satisfied.
Fact: 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 document, in case it's required to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can serve as a record for the future, containing an exorbitant amount 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 proximity.
Myth: There is no reason to order an appraisal unless you are trying to get an assessment of the cost of a house during a sales transaction involving a lender.
Fact: Appraisers can have many varied qualifications and designations which allow them to perform a multitude of different services including - but 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.
Fact: A home inspection report serves 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 creating the report. House inspectors will produce a report that will show the condition of the house and its major components and possible damage.