Common myths about appraising
Legally, a real estate appraiser is required to be state certified to produce legitimate real estate appraisals for federally-backed sales. The law allows you to get a copy of your completed appraisal from your lending agency after it has been provided. Contact us if you have any concerns about the appraisal process.
Myth: Market value has to be similar to the assessed value of the property.
Fact: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always. Usually when interior remodeling has occurred and the assessor is not aware of the improvement or properties in the Los Angeles have not been reassessed for a good length of time, it may vary wildly.
Myth: The buyer or the seller may have impact in the cost of the home depending upon for whom the appraiser is working.
Fact: There is no personal interest on the part of the appraiser in the outcome of the appraisal, therefore he will conduct his work with impartiality and independence, despite for whom the appraisal is written.
Myth: Any time market value is found, it should be the same as the replacement cost of the house.
Fact: Market value is found by what a willing buyer would likely pay a willing seller for a particular property, with neither being under duress to buy or sell. The dollar amount needed to reconstruct a house is what constitutes the replacement cost.
Myth: Appraisers use a calculation, like a certain price per square foot, to arrive at the value of a home.
Fact: There are many varied calculations that an appraiser will use to make an in-depth investigation of every factor in consideration of the property, such as the size, location, condition, how close it is to undesirable facilities and the value of recently sold comparable properties.
Myth: As houses increase their worth by a specific percentage - in a robust economic state - the homes around the appreciating properties are expected to appreciate by the same amount.
Fact: Cost appreciation of a specific property must be concluded on a case-by-case basis, factoring in information on comparable properties and other relevant elements. It doesn't matter if the economy is on the rise or declining.
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Myth: You can usually tell what a house is worth simply by looking at the outside.
Fact: To conclude an accurate worth beyond all doubt, an appraiser must examine the house on a variety of factors based on area, condition, improvements, amenities, and current market trends. An outside-only inspection obviously can't provide all of the data required.
Myth: Because consumers pay for appraisals when applying for loans to purchase or refinance their home, they own their appraisal report.
Fact: The appraisal report is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the appraisal report. Consumers have to be given a version of the document upon written request because of the Equal Credit Opportunity Act.
Myth: There's no need for home buyers to even worry about what the appraisal report contains so long as their lending institution is satisfied.
Fact: A consumer should definitely inspect their appraisal report; there could be some questions or some worries with the accuracy of the report that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can double as a record for the future, as it contains an exorbitant amount 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 area.
Myth: The only reason someone would hire an appraiser is if a house needs its worth assessed in a lender sales transaction.
Fact: Depending upon their qualifications and designations, appraisers can and often do perform a variety of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A house inspection serves the same purpose as an appraisal.
Fact: An appraisal report does not serve the same purpose as an inspection. The appraiser finds an opinion of value in the appraisal process and resulting appraisal report. A home inspector determines the condition of the building and its main components and reports these findings.