Myth: Market value will be equivocal to the assessed value of the property.
Reality: While most states uphold the suggestion that assessed value is equal to estimated market value, this usually is not the case. Usually when interior remodeling has occurred and the assessor is unaware of the improvement or other homes in the neighborhood have not been reassessed for quite some time, it may vary widely.
Myth: The buyer or the seller can have impact in the value of the home depending upon for whom the appraiser is working.
Reality: The opinion of value of the house does not affect the pay of the appraiser; as such, the appraiser has no personal interest in the price of the home. Obviously, he will provide job with impartiality and objectivity regardless of for whom the appraisal is provided.
Myth: The replacement cost of the house should be on par with the market value.
Reality: Market value is based on what a willing buyer would likely pay a willing seller for a specific house, with neither being under undue influence to buy or sell. Replacement value is the dollar amount necessary to reconstruct a property in-kind.
Myth: Certain methods, like the price per square foot of the property, are what appraisers use to ascertain the value of a home.
Reality: There are many varied ways 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 values of recently sold comparable homes.
Myth: When the economy is on the rise and the sales prices of homes are reported to be increasing by a certain percentage, the other houses in the area can be expected to rise based on that same percentage.
Reality: Any value an appraiser reports concerning a certain property is always individualized, based on certain factors found from the information of comparable houses and other considerations within the house itself. 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 idea of its value.
Reality: There are a multitude of different factors that show the value of a home; these factors include area, condition, improvements, amenities, and market trends. An exterior inspection certainly can't provide all of the information needed.
Myth: Because the consumer is the person who provides the funding to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal is theirs.
Reality: Unless a lending agency releases its interest in the appraisal report, it is legally owned by the lending agency that purchased the appraisal. Due the Equal Credit Opportunity Act, any home buyer asking for a copy of the appraisal report must be given it by their lending agency.
Myth: It doesn't mean anything to consumers what's in the appraisal report so long as it meets the requirements of their lending agency.
Reality: Only when consumers check out a copy of their appraisal 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. An report can double as a record for the future, containing an incredible amount of data - 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 area.
Myth: Appraisers are hired only to estimate home values in property sales involving mortgage-lending transactions.
Reality: Appraisers can have many different qualifications and designations which allow them to provide a series of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: You don't need to get an appraisal if you have had a home inspection.
Reality: Appraisal reports are completely different than a home inspection report. The point of an appraisal is to form an opinion of market value during the appraisal process and the production of the report. House inspectors will compose a report that will express the condition of the home and its major components and possible damage.