Appraisal myths debunked
By law, an appraiser is required to be state-licensed to perform appraisals for federally-backed transactions. Also by law, you have the ability to request a copy of the finished appraisal report from your lending agency. Contact our professional staff if you have any questions about the appraisal process.
Myth: Assessed value will always be similar to to market value.
Fact: This is not often the case; most states do support the suggestion 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 extended period of time.
Myth: The appraised value of a home will vary depending upon if the appraisal is provided for the buyer or the seller.
Fact: There is no real interest on the part of the appraiser in the outcome of the report, therefore he will complete his work with impartiality and independence, regardless for whom the appraisal is created.
Myth: The replacement value of the home is always is on par with the market value.
Fact: Without any pressure from any external parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific home. Replacement cost is the dollar amount necessary to reconstruct a property in-kind.
Myth: Certain methods, such as the price per square foot of the property, are the ways appraisers use to arrive at the value of a house.
Fact: There are many varied ways that an appraiser will use to make a comprehensive investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to undesirable facilities and the opinion of value of recently sold comparable homes.
Myth: In a strong economy - when the values of properties in a given county are reported to be rising by a certain percentage - the costs of individual houses in the proximity can be expected to increase by that same percentage.
Fact: Any cost at which an appraiser arrives concerning a particular house is always personalized, based on certain factors found from the information of comparable houses and other specifications within the property itself. It doesn't matter if the economy is doing well or declining.
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Myth: The house's exterior is determinate of the actual price of the property; there is no need to do an interior inspection.
Fact: To find an accurate value beyond all doubt, an appraiser must examine the home on a variety of factors based on location, condition, improvements, amenities, and current market trends. As you can see, none of these things can be found simply by inspecting the house from the outside.
Myth: Because the consumer is the party who provides the money to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal belongs to them.
Fact: Unless a lending agency releases its interest in the report, it is legally owned by the lending company that purchased the appraisal. Due the Equal Credit Opportunity Act, any consumer asking for a copy of the report must be given it by their lender.
Myth: There's no reason for home buyers to even worry about what the appraisal contains so long as their lending institution is satisfied.
Fact: A home buyer should definitely look through their document; there might be some questions or some concerns with the accuracy of the appraisal that need to be addressed. 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 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 proximity.
Myth: The only reason someone would hire an appraiser is if a house needs its value estimated in a lender-based sales transaction.
Fact: Appraisers can have many different qualifications and designations which allow them to perform a series 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: A property inspection serves the same purpose as an appraisal.
Fact: A home inspection report has a completely different purpose than an appraisal report. An appraiser concludes on an opinion of value in the appraisal process and resulting appraisal. The point of a home inspector is to determine the condition of the house and its major components, then compose a report on these conclusions.