Myth: Market value has to be the same as the assessed value of the property.
Reality: 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.
Examples include when interior reconstruction has happened and the assessor has not seen the improvements, or when houses in the area have not been reassessed for an prolonged time.
Myth: The value of a property will differ depending upon if the appraisal is provided for the buyer or the seller.
Reality: The appraised value of the property does not affect the payment of the appraiser; due to this, the appraiser has no vested interest in the price of the home. Obviously, he will conduct business with impartiality and independence regardless of for whom the appraisal is provided.
Myth: The replacement cost of the property should be on par with the market value.
Reality: Market value is based on what a willing buyer would be interested in paying a willing seller for a specific property, with neither being under undue influence to buy or sell.
Replacement value is the dollar amount needed to rebuild a home in-kind.
Myth: There are certain ways that real estate appraisers use to determine the opinion of value of a home, like the price per square foot.
Reality: Appraisers complete an exhaustive analysis of all factors in consideration to the value of a property, including its location, condition, size, proximity to facilities and recent sale prices of comparable homes.
Myth: When the economy is doing well and the sales prices of properties are reported to be rising by a certain percentage, the other houses in the neighborhood can be expected to rise based on that same percentage.
Reality: Any value an appraiser derives in regards to a specific house is always personalized, based on certain factors concluded from the data of comparable homes and other considerations within the house itself.
This is true in excellent economic times as well as poor.
Myth: You can often tell what a property is worth simply by looking at the outside.
Reality: To conclude a solid value beyond all doubt, an appraiser must assess the home on a variety of factors based on location, condition, improvements, amenities, and current market trends.
An external inspection obviously can't provide all of the information required.
Myth: Since you're the one paying for the appraisal report when applying for the loan to purchase or refinance your home, you own the provided appraisal report.
Reality: Unless a lender releases its vestment in the report, it is legally owned by the lending company that ordered the appraisal.
Under the Equal Credit Opportunity Act, any home buyer asking for a copy of the report must be given it by their lending agency.
Myth: It doesn't concern consumers what's in the report so long as it meets the requirements of their lending company.
Reality: Only when home buyers check out a copy of their appraisal can they ensure its accuracy and know if they should ask questions. Remember, this is probably the most expensive and important investment a consumer will ever make.
Also, the appraisal makes a near perfect record for future reference, comprised of helpful and often-revealing information - 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 vicinity.
Myth: There is no reason to hire an appraiser unless you are trying to get an assessment of the value of a house during a sales transaction involving a lending company.
Reality: Based upon their qualifications and designations, appraisers can and may provide a series of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A home inspection serves the same purpose as an appraisal.
Reality: Appraisal reports are completely different than a home inspection.
The function of an appraisal is to conclude upon an opinion of market value during the appraisal process and the production of the appraisal.
A home inspector determines the condition of the home and its major components and reports their findings.