Myth: Assessed value generally will equate market value.
Reality: 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.
Interior remodeling that the assessor is unaware of and a dearth of reassessment on nearby homes are exact examples of why this occurs.
Myth: Depending on whether the appraisal is produced for the buyer or the seller, the cost of the house will vary.
Reality: The appraiser has no personal interest in the outcome of the appraisal report and should render his job with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: Market value should equal replacement cost.
Reality: 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 party to purchase or sell.
The dollar amount demanded to reconstruct a property is what shows the replacement cost.
Myth: Appraisers use a formula, such as a specific price per square foot, to arrive at the value of a home.
Reality: There are many numerous ways that an appraiser will use to make an in-depth analysis of every factor pertaining to the house, such as the size, location, condition, how close it is to specific facilities and the values of recently sold comparable homes.
Myth: In a strong economy - when the values of houses in a given county are found to be appreciating by a particular percentage - the values of individual homes in the proximity can be expected to rise by that same percentage.
Reality: The appreciation of a specific home must be determined on an individualized basis, factoring in data on comparable houses and other relevant considerations.
This is true in good economic times as well as bad.
Myth: The home's outside is determinate of the actual value of the property; there is no need to do an interior appraisal.
Reality: House value is determined by a multitude of variables, including area, condition, improvements, amenities, and market trends.
An outside-only inspection definitely can't provide all of the data needed.
Myth: Because the consumer is the person who puts up the funding to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal report is theirs.
Reality: The appraisal is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the document.
Due the Equal Credit Opportunity Act, any consumer demanding a copy of the document must be given one by their lender.
Myth: It doesn't matter to consumers what's in the appraisal report so long as it satisfies the needs of their lending agency.
Reality: A consumer should definitely look through their appraisal report; there could be some questions or some worries about the accuracy of the analysis that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make.
An appraisal report can double as a record for the future, as it contains an exorbitant amount of data - 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 proximity.
Myth: The only reason someone would hire an appraiser is if a property needs its value estimated in a lender sales transaction.
Reality: Ordering an appraisal can fulfill a variety of requirements depending on the designations and certifications of the appraiser involved; appraisers can perform a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: An appraisal is the same as a home inspection report.
Reality: An appraisal report does not serve the same purpose as an inspection report.
An appraiser forms an opinion of value in the appraisal process and resulting document.
The task of a home inspector is to find the condition of the home and its main components, then compose a report on their inspection.
