Appraisal myths & facts
Legally, an appraiser has to be state certified to write legitimate appraisal reports for federally-related purchase. Also by law, you have the right to request a copy of the completed appraisal from your lending agency. Contact Robert Ensminger Appraisers & Ensminger Auctioneers if you have any questions about the appraisal process.
Myth: Market value will be the same as the assessed value of the property.
Fact: While most states support the concept that assessed value is the same as estimated market value, this often is not the case. Interior remodeling that the assessor is unaware of and a lack of reassessment on nearby homes are exact examples of why there might be a differential in price.
Myth: Depending on whether the appraisal is done for the buyer or the seller, the opinion of value of the property will vary.
Fact: The appraiser has no vested interest in the result of the appraisal report and should conduct his task with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: Any time market value is found, it should equal the replacement cost of the house.
Fact: Market value is acquired by what a willing buyer would likely pay a willing seller for a specific home, with neither being under pressure to buy or sell. The dollar amount necessary to rebuild a house is what forms the replacement cost.
Myth: There are specific methods that real estate appraisers use to show the opinion of value of a home, such as the price per square foot.
Fact: There are many varied processes that an appraiser will use to make a full analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to undesirable facilities and the opinion of value of recently sold comparable houses.
Myth: When the economy is robust and the cost of houses are found to be appreciating by a certain percentage, the other properties in the neighborhood can be expected to rise based on that same percentage.
Fact: All appreciation of worth is on a one-on-one basis, found by data on relevant considerations and the data of comparable homes. It makes no difference if the economy is good or terrible.
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Myth: Just seeing what the property looks like on the outside gives an excellent idea of its value.
Fact: To conclude an accurate worth beyond all doubt, an appraiser must examine the house on a variety of factors based on location, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from just examining the house from the outside.
Myth: Considering that the consumer is the one who puts up the funding to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.
Fact: The appraisal report is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the report. However, consumers must be given a copy of the document upon written request, through the Equal Credit Opportunity Act.
Myth: There's no point for consumers to even worry about what the appraisal report contains so long as their lending institution is satisfied.
Fact: It is very important for home buyers to check over a copy of their appraisal so that they can verify the accuracy of the report, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can serve as a record for the future, as it contains 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 proximity.
Myth: The only reason someone would hire an appraiser is if a house needs its cost estimated in a lender sales transaction.
Fact: Depending upon their qualifications and designations, appraisers can and often do perform a multitude of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal is the same as a home inspection report.
Fact: Appraisal reports are definitely not the same as a home inspection. The point of an appraisal is to conclude upon an opinion of fair market value during the appraisal process and the completion of the appraisal report. House inspectors will compose a report that will express the condition of the house and its major components and possible damage.