Myth: Assessed value should equate market value.
Reality: While most states uphold the concept that assessed value is the same as estimated market value, this commonly is not the case. Examples include when interior remodeling has happened and the assessor does not know about the improvements, or when houses in the area have not been reassessed for an extended time.
Myth: The appraised value of a home will be different depending upon if the appraisal is conducted for the buyer or the seller.
Reality: There is no vested interest on the part of the appraiser in the outcome of the appraisal, therefore he will conduct his work with impartiality and independence, no matter of for whom the appraisal is conducted.
Myth: Any time market value is established, it should be the same as the replacement cost of the house.
Reality: Without any influence from any outside parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a specific property. If the home were reconstructed, the dollar amount needed to do so would make up the replacement cost.
Myth: Appraisers use a formula, like a specific price per square foot, to come to the value of a property.
Reality: Appraisers complete a full analysis of all factors pertaining to the value of a home, including its location, condition, size, proximity to facilities and recent values of comparable properties.
Myth: In a robust economy - when the sales prices of properties in a given neighborhood are found to be increasing by a certain percentage - the values of individual houses in the vicinity can be expected to appreciate by that same percentage.
Reality: All appreciation of value is on a case-by-case basis, concluded by data on relevant considerations and the data of comparable houses. It makes no difference if the economy is powerful or on the decline.
Myth: You can usually tell what a property is worth simply by looking at the outside.
Reality: To find a conclusive value beyond all doubt, an appraiser must inspect the property on a variety of factors based on location, condition, improvements, amenities, and current market trends. An external inspection definitely can't provide all of the information necessary.
Myth: Because consumers fund the appraisal when applying for loans to buy or refinance their house, they own their appraisal report.
Reality: Unless a lender releases its vestment in the document, it is legally owned by the lending agency that ordered the appraisal. However, consumers must be given a copy of the appraisal upon written request, under the Equal Credit Opportunity Act.
Myth: Consumers need not be concerned with what is in their appraisal report so long as it satisfies the needs of their lending company.
Reality: A consumer should definitely read through their appraisal; there could be some questions or some concerns with the accuracy of the analysis that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of information contained in an appraisal that can be useful to the consumer in the future, such as 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: Appraisals are ordered only to assess house values in house sales involving mortgage-lending transactions.
Reality: Appraisers can have many different qualifications and designations which allow them to provide a lot of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: An appraisal is the same as a home inspection report.
Reality: A home inspection has a completely different purpose than an appraisal. The job of the appraiser is to form an opinion of value in the appraisal process and through writing the report. A home inspector determines the condition of the building and its main components and reports these findings.
