Appraisal myths debunked
It is enforced by law that an appraiser must be state-licensed to produce appraisal reports for federally-related property transactions in California. Also by law, you are entitled to request a copy of the completed report from your lending agency. Contact our professional staff if you have any concerns about the appraisal procedure.
Myth: Assessed value generally will be the same as to market value.
Fact: While most states uphold the suggestion that assessed value equates estimated market value, this commonly is not the case. Examples include when interior remodeling has occurred and the assessor does not know about the improvements, or when houses in the area have not been reassessed for an prolonged time.
Myth: The opinion of value of a property will vary depending upon if the appraisal is ordered for the buyer or the seller.
Fact: The appraiser has no personal interest in the result of the report and should render services with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Any time market value is established, it should equal the replacement cost of the property.
Fact: Market value is derived from what a willing buyer would likely pay a willing seller for a particular house, with neither being under pressure to buy or sell. The dollar amount demanded to rebuild a home is what forms the replacement cost.
Myth: There are certain ways that appraisers use to show the opinion of value of a house, like the price per square foot.
Fact: There are many differing formulae that an appraiser will use to make a comprehensive investigation of every factor in consideration of the house, such as the size, location, condition, how close it is to certain facilities and the opinion of value of recently sold comparable homes.
Myth: In a strong economy - when the values of homes in a given neighborhood are reported to be increasing by a certain percentage - the worth of individual homes in the proximity can be expected to rise by that same percentage.
Fact: All increase of worth is on an individual basis, determined by information on relevant considerations and the data of comparable properties. This is true in strong economic times as well as bad.
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Myth: The property's exterior is determinate of the actual worth of the property; there is no need to do an interior appraisal.
Fact: There are a multitude of different variables that show property value; these factors include area, condition, improvements, amenities, and market trends. An exterior inspection definitely can't provide all of the data necessary.
Myth: Since the consumer is the one who provides the funding to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal report is theirs.
Fact: Unless a lender releases its vestment in the report, it is legally owned by the lending company that purchased the appraisal. However, home buyers must be supplied with a copy of the document upon written request, under the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the report so long as it meets the necessities of their lending agency.
Fact: It is very important for consumers to check over a copy of their appraisal so that they can double-check the accuracy of the document, in case there is a need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes a valuable record for future reference, containing useful and often-revealing information - 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 hire an appraiser unless you are trying to get an estimate of the worth of a house during a sales transaction involving a lending agency.
Fact: Hiring an appraiser can fulfill a variety of necessities depending on the designations and certifications of the appraiser involved; appraisers can perform a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: A house inspection serves the same purpose as an appraisal.
Fact: A home inspection has a completely different purpose than an appraisal report. The job of the appraiser is to come to an opinion of value in the appraisal process and through creating the report. The purpose of a home inspector is to find the condition of the home and its main components, then compose a report on their inspection.