Common myths about appraising
By law, an appraiser is enforced to be state-licensed to offer appraisals for federally-related sales. The law gives you the right to acquire a copy of your completed appraisal from your lender after it has been provided. Contact WalshStreet Appraisals if you have any concerns about the appraisal procedure.
Myth: The value that is assessed by the appraiser should be the same as the market value.
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. Often when interior remodeling has occurred and the assessor is unaware of the improvement or other houses in the area have not been reassessed for years or more, it may vary wildly.
Myth: Depending on if the appraisal is produced for the buyer or the seller, the appraised value of the property will vary.
Fact: The appraiser has no personal interest in the outcome of the report and should complete his task with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: The replacement cost of the property should be is on par with the market value.
Fact: The way market value is derived is based on what a home buyer would likely pay a willing seller for a home without being under duress from any outside party to buy or sell. The dollar amount necessary to rebuild a property is what shows the replacement cost.
Myth: Appraisers use a calculation, such as a specific price per square foot, to conclude the worth of a home.
Fact: Appraisers make a detailed analysis of all factors in consideration to the price of a property, including its location, condition, size, proximity to facilities and recent costs of comparable houses.
Myth: When the economy is on the rise and the cost of homes are reported to be increasing by a certain percentage, the other houses in the proximity can be expected to appreciate based on that same percentage.
Fact: Price increase of a specific home is always determined on a case-by-case basis, factoring in information on comparable properties and other relevant elements. It makes no difference if the economy is strong or poor.
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Myth: Just examining what the house looks like on the outside gives an excellent idea of its worth.
Fact: To determine an accurate price beyond all doubt, an appraiser must assess the house on a variety of factors based on area, condition, improvements, amenities, and market trends. As you can see, none of these things can be found simply by examining the property from the outside.
Myth: Since you're the one paying for the appraisal when applying for your loan to purchase or refinance real estate, you own the provided 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. Due the Equal Credit Opportunity Act, any consumer demanding a copy of the appraisal report must be given one by their lender.
Myth: It doesn't mean anything to consumers what's in the appraisal so long as it meets the needs of their lending company.
Fact: A consumer should definitely look through their appraisal; there will probably be some questions or some worries with the accuracy of the analysis that must be addressed. 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, since it contains an exorbitant 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 proximity.
Myth: The only reason someone would order an appraisal is if a home needs its cost estimated in a lender sales transaction.
Fact: Depending upon their qualifications and designations, appraisers can and will provide a lot of different 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: Appraisal reports are definitely not the same as a home inspection. An appraiser forms an opinion of value in the appraisal process and resulting appraisal. A home inspector assesses the condition of the building and its main components and reports these findings.