Myth: Assessed value should always be the same as market value.
Reality: While most states uphold the suggestion that assessed value is equal to estimated market value, this commonly is not the case.
Examples include when interior reconstruction has occurred and the assessor does not know about the improvements, or when houses in the area have not been reassessed for an extended period.
Myth: The buyer or the seller sometimes may have impact in the value of the house depending upon for whom the appraiser is working.
Reality: The appraiser has no vested interest in the result of the appraisal and should conduct his task with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Market value should be the same as replacement cost.
Reality: 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.
Replacement value is the dollar amount needed to rebuild a house in-kind.
Myth: Appraisers use a formula, such as a certain price per square foot, to figure out the value of a property.
Reality: There are many differing processes that an appraiser will use to make a full analysis of every factor in consideration of the home, such as the size, location, condition, how close it is to undesirable facilities and the sales prices of recently sold comparable homes.
Myth: As houses increase in value by a certain percentage - in a robust economy - the houses in proximity are figured to increase by the same amount.
Reality: The appreciation of a specific house must be concluded on a case-by-case basis, factoring in data on comparable homes and other relevant specifications within the property itself.
This is true in robust economic times as well as bad.
Myth: The house's exterior is determinate of the expected price of the home; it is unnecessary to do an interior inspection.
Reality: To conclude a genuine value beyond all doubt, an appraiser must inspect the house on a variety of factors based on area, condition, improvements, amenities, and market trends.
As you can see, none of these things can be derived just by viewing the house from the exterior.
Myth: Because consumers fund appraisals when applying for loans to buy or refinance real estate, they own their appraisal report.
Reality: Legally, the appraisal report is owned by the lender unless the lender releases their interest in the appraisal.
However, consumers have to be supplied with a copy of the report upon written request, due to the Equal Credit Opportunity Act.
Myth: Consumers need not care about what is in their appraisal document so long as it meets the requirements of their lending institution.
Reality: It is a very good idea for home buyers to go through a copy of their appraisal report so that they can double-check 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.
Also, the appraisal makes a valuable record for future reference, containing useful 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: Appraisals are ordered only to assess building values in house sales involving mortgage-lending transactions.
Reality: Appraisers can have many different qualifications and designations which allow them to provide a variety 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: A house inspection serves the same purpose as an appraisal.
Reality: A home inspection report has a completely different purpose than an appraisal report.
The job of the appraiser is to come to an opinion of value in the appraisal process and through producing the report.
A home inspector analyzes the condition of the building and its major components and reports these findings.
