Common myths about appraising
Legally, an appraiser needs to be state certified to write substantiated appraisal reports for federally-supported purchase. You are also entitled by law to request a copy of the finished report from your lending agency. Contact us if you have any questions about the appraisal procedure.
Myth: The value that is assessed by the appraiser should be equivalent to the market value.
Fact: It is probable that California, like most states, validates the common myth that the assessed value equals the market value; however, this is not often the case. Examples include when interior remodeling has occurred and the assessor has not seen the improvements, or when homes in the area have not been reassessed for an prolonged period of time.
Myth: The opinion of value of a home will differ depending upon if the appraisal is conducted for the buyer or the seller.
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: The replacement value of the home is always is on par with the market value.
Fact: Without any pressure from any outside parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific home. The dollar amount needed to reconstruct a home is what forms the replacement cost.
Myth: Specific formulae, like the price per square foot of the property, are the ways appraisers use to come to the worth of a property.
Fact: Appraisers complete an exhaustive analysis of all factors in consideration to the worth of a house, including its location, condition, size, proximity to facilities and recent sale prices of comparable homes.
Myth: When the economy is on the rise and the sales prices of houses are found to be appreciating by a certain percentage, the other properties in the vicinity can be expected to increase based on that same percentage.
Fact: All appreciation of worth is on a case-by-case basis, found by information on relevant elements and the data of comparable properties. This is true in good economic times as well as bad.
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Myth: Just looking at what the property looks like on its exterior gives a good idea of its value.
Fact: To conclude an accurate value beyond all doubt, an appraiser must inspect the property on a variety of factors based on location, condition, improvements, amenities, and market trends. There's no real way to get all of this information from just looking at the home from the exterior.
Myth: Because consumers pay for appraisal reports when applying for loans to buy or refinance their home, they own their appraisal report.
Fact: Legally, the appraisal report is owned by the lender unless the lender relinquishes their interest in the report. Home buyers must be provided with a copy of the appraisal report through request because of the Equal Credit Opportunity Act.
Myth: It doesn't concern consumers what's in the appraisal so long as it satisfies the needs of their lending company.
Fact: It is very important for home buyers to peruse a copy of their report so that they can double-check the accuracy of the report, in case it's required to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes an invaluable record for future reference, containing useful and often-revealing data - 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: Appraisers are hired only to estimate building values in home sales involving mortgage-lending transactions.
Fact: Appraisers can have many varied qualifications and designations which allow them to perform a lot of different services including - but definitely not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: You don't need to get an appraisal if you order a home inspection.
Fact: A home inspection report has a completely different purpose than an appraisal. The function of an appraisal is to form an opinion of fair market value during the appraisal process and the production of the appraisal. A home inspector determines the condition of the house and its main components and reports their findings.
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