Appraisal myths & facts
By law, an appraiser needs to be state-licensed to perform appraisals for federally-supported purchases. You also have the right to request a copy of the completed report from your lending agency. Contact our professional staff if you have any concerns about the appraisal process.
Myth: Assessed value should be the same as to 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. There are times when interior remodeling has been done and the assessor is unaware of the improvement or other homes in the Flint have not been reassessed for a good length of time, it may vary wildly.
Myth: Depending on if the appraisal is ordered for the buyer or the seller, the value of the house will vary.
Fact: The appraiser has no personal interest in the result of the report and should complete his task with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: Market value will approximate replacement cost.
Fact: The way market value is derived is based on what a buyer would likely pay a willing seller for a home without being under pressure from any outside group to purchase or sell. The dollar amount required to rebuild a home is what forms the replacement cost.
Myth: Appraisers use a calculation, like a specific price per square foot, to arrive at the cost of a house.
Fact: An appraisal report is an amalgamation of data concluded from the house's size, location, proximity to some facilities, the condition of the home and the value of recent comparable sales. You can count on Allied Real Estate Appraisers's appraisers to be honest in assessing this information.
Myth: When the economy is doing well and the value of properties are found to be increasing by a certain percentage, the other properties in the proximity can be expected to increase based on that same percentage.
Fact: Value increase of a specific house has to be determined on a case-by-case basis, factoring in information on comparable properties and other relevant elements. It makes no difference whether the economy is good or poor.
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Myth: Just examining what the house looks like on the outside gives an excellent idea of its value.
Fact: To determine an accurate price beyond all doubt, an appraiser must assess the property on a variety of factors based on location, condition, improvements, amenities, and current market trends. An outside-only inspection obviously can't provide all of the information required.
Myth: Because consumers fund appraisal reports when applying for loans to buy or refinance their home, they own their appraisal report.
Fact: Unless a lender releases its vestment in the report, it is legally owned by the lending agency that purchased the appraisal. However, consumers must be provided with a copy of the document upon written request, under the Equal Credit Opportunity Act.
Myth: There's no reason for consumers to even care about what the appraisal contains so long as their lender is fine with the contents therein.
Fact: Only if consumers look at a copy of their appraisal can they verify its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of data contained in an report that could be useful to the home buyer 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: 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 agency.
Fact: Depending upon their qualifications and designations, appraisers can and may perform a series of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal report is the same as a home inspection report.
Fact: Appraisal reports are nothing like a home inspection report. The appraiser decides upon an opinion of value in the appraisal process and resulting appraisal. House inspectors will write a report that will determine the condition of the property and its major components and possible damage.