Appraisal myths & facts

It is enforced by the government that an appraiser needs to be state-licensed to write appraisals for federally-supported real estate purchases in California. Also by law, you have the ability to demand a copy of the completed report from your lending agency. Contact Choice Appraisals, Inc. if you have any questions about the appraisal process.

Myth: Assessed value should always be the same as to market value.

Fact: This is not often the case; most states do support the suggestion that the assessed value is the same as market value, but not always. There are times when interior remodeling has been done and the assessor is has not investigated the improvement or properties in the neighborhood have not been reassessed for years or more, it may vary wildly.

Myth: The value of a home will differ depending upon whether the appraisal is conducted for the buyer or the seller.

Fact: 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 for whom the appraisal is ordered.

Myth: The replacement cost of the house should be is on par with the market value.

Fact: Market value is derived from what a willing buyer would be interested in paying a willing seller for a particular property, with neither being under pressure to buy or sell. The dollar amount demanded to reconstruct a home is what shows the replacement cost.

Myth: Specific methods, like the price per square foot, are the ways appraisers use to ascertain the value of a house.

Fact: Appraisers complete a detailed analysis of all factors in consideration to the price of a home, including its location, condition, size, proximity to facilities and recent worth of comparable properties.

Myth: When the economy is on the rise and the sales prices of properties are reported to be appreciating by a certain percentage, the other homes in the proximity can be expected to rise based on that same percentage.

Fact: Value increase of a specific property has to be concluded on an individualized basis, factoring in data on comparable houses and other relevant elements. It makes no difference whether the economy is excellent or on the decline.

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Myth: The home's exterior is determinate of the actual price of the property; there is no need to do an interior inspection.

Fact: To conclude an accurate value beyond all doubt, an appraiser must examine the house on a variety of factors based on area, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from just examining the home from the outside.

Myth: Since you're the one paying for the appraisal report when applying for the loan to purchase or refinance real estate, you own the provided appraisal.

Fact: Legally, the appraisal is owned by the lending company unless the lender releases their interest in the appraisal. However, consumers must be supplied with a copy of the report upon written request, because of the Equal Credit Opportunity Act.

Myth: There's no reason for home buyers to even care about what the appraisal report contains so long as their lending agency is satisfied.

Fact: It is almost imperative for home buyers to peruse a copy of their appraisal so that they can double-check the accuracy of the report, in case they 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 contained in an appraisal report that should be useful to the consumer 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: The only reason someone would order an appraisal is if a home needs its price assessed in a lender sales transaction.

Fact: Hiring an appraiser can fulfill a variety of requirements depending on the designations and certifications of the appraiser involved; appraisers can perform a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.

Myth: An appraisal is no different than a home inspection report.

Fact: An appraisal does not fulfill the same purpose as an inspection. The reason behind an appraisal report is to form an opinion of fair market value during the appraisal process and the production of the appraisal. A home inspector assesses the condition of the house and its major components and reports these findings.