Appraisal myths debunked
Legally, an appraiser is required to be state certified to perform substantiated real estate appraisals for federally-related purchase. You are also entitled by law to receive a copy of the finished appraisal report from your lending agency. Contact our professional staff if you have any concerns about the appraisal process.
Myth: Market value will always be similar to the assessed value of the property.
Fact: While most states uphold the suggestion that assessed value is equal to estimated market value, this commonly is not the case. Examples include when interior reconstruction has occurred and the assessor has not seen the improvements, or when homes in the area have not been reassessed for an prolonged period of time.
Myth: The buyer or the seller may have leverage in the cost of the property depending upon for whom the appraiser is working.
Fact: There is no real interest on the part of the appraiser in the result of the appraisal, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is created.
Myth: Any time market value is established, it should equate to the replacement cost of the property.
Fact: The way market value is arrived at is based on what a home buyer would be willing to pay a willing seller for a home without being under pressure from any outside group to purchase or sell. Replacement cost is the dollar amount necessary to reconstruct a property in-kind.
Myth: Certain methods, such as the price per square foot of the property, are the methods appraisers use to ascertain the cost of a house.
Fact: Appraisers make a detailed analysis of all factors pertaining to the value of a home, including its location, condition, size, proximity to facilities and recent costs of comparable properties.
Myth: As homes appreciate by a certain percentage - in a strong economic state - the properties nearby are expected to increase by the same amount.
Fact: Value appreciation of a specific property has to be determined on a case-by-case basis, factoring in data on comparable homes and other relevant specifications within the home itself. It doesn't matter if the economy is doing well or declining.
Have other questions about appraisers, appraising or real estate in Los Angeles County or Los Angeles, CA?Contact our professional staff
Myth: You can usually see what a house is worth simply by looking at the exterior.
Fact: Property value is determined by a number of variables, including location, condition, improvements, amenities, and market trends. An external inspection definitely can't provide all of the information required.
Myth: Because consumers pay for appraisal reports when applying for loans to buy or refinance their home, they own their appraisal report.
Fact: The report is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the report. Consumers must be given a copy of the appraisal report upon written request because of the Equal Credit Opportunity Act.
Myth: Consumers need not worry about what is in their appraisal so long as it exceeds the requirements of their lending company.
Fact: A home buyer should definitely look through their report; there might be some questions or some worries with the accuracy of the appraisal report that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes an invaluable record for future reference, filled with helpful and often-revealing data - including 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: There is no reason to order an appraisal unless you are trying to get an estimate of the value of a property during a sales transaction involving a lending institution.
Fact: Depending upon their qualifications and designations, appraisers can and often do perform a series of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: You shouldn't need to get an appraisal if you have had a home inspection.
Fact: An appraisal does not serve the same purpose as an inspection. The reason behind an appraisal report is to conclude upon an opinion of fair market value during the appraisal process and the production of the appraisal report. House inspectors will write a report that will show the condition of the property and its major components and possible damage.