Appraisal myths & facts
Legally, a real estate appraiser is required to be state certified to produce legitimate appraisal reports for federally-related sales. Also by law, you have the right to request a copy of the finished appraisal from your lender. Contact our professional staff if you have any questions about the appraisal procedure.
Myth: Assessed value should be the same as to market value.
Fact: While most states back the concept that assessed value is the same as estimated market value, this generally is not the case. Examples include when interior remodeling has happened and the assessor is unaware of the improvements, or when houses in the vicinity have not been reassessed for an prolonged time.
Myth: Depending on if the appraisal is provided for the buyer or the seller, the cost of the home will vary.
Fact: The cost of the house does not affect the pay of the appraiser; due to this, the appraiser has no pressured interest in the value of the house. Obviously, he will provide business with impartiality and objectivity regardless for whom the appraisal is created.
Myth: Market value will equate to replacement cost.
Fact: The way market value is found is based on what a buyer would likely pay a willing seller for a property without being under pressure from any external group to purchase or sell. If the home were reconstructed, the dollar amount necessary to do so would make up the replacement cost.
Myth: There are certain ways that appraisers use to find the value of a house, such as the price per square foot.
Fact: An appraisal is an assertion of information concluded from the house's size, location, proximity to certain facilities, the condition of the home and the worth of recent comparable sales. You can rely on REID E. CHOATE & ASSOCIATES, LLC's staff to be professional in assessing this data.
Myth: As houses increase their worth by a certain percentage - in a robust economic state - the homes nearby are expected to increase by the same amount.
Fact: Any price at which an appraiser concludes in regards to a particular house is always individualized, based on certain factors found from the data of comparable houses and other specifications within the home itself. It doesn't matter if the economy is doing well or declining.
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Myth: Just looking at what the house looks like on its exterior gives a good idea of its worth.
Fact: There are a number of different variables that determine property value; these factors include location, condition, improvements, amenities, and market trends. An external inspection certainly can't provide all of the information required.
Myth: Since the consumer is the party who puts up the funding to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal is theirs.
Fact: Legally, the document is owned by the lender unless the lender releases their interest in the report. Due the Equal Credit Opportunity Act, any consumer requesting a copy of the document must be provided with one by their lending agency.
Myth: It doesn't mean anything to consumers what's in the appraisal report so long as it meets the requirements of their lending company.
Fact: It is almost imperative for consumers to look at a copy of their appraisal report so that they can verify the accuracy of the report, in case there is a need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can double as a record for the future, containing a great deal of information - including, but certainly 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 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 company.
Fact: Depending upon their qualifications and designations, appraisers can and do perform a variety of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal is the same as a home inspection.
Fact: A home inspection serves a completely different purpose than an appraisal report. The purpose of an appraisal is to conclude upon an opinion of fair market value during the appraisal process and the completion of the report. House inspectors will create a report that will explain the condition of the home and its major components and possible damage.