Common myths about appraising
Legally, an appraiser must be state certified to perform legitimate real estate appraisals for federally-backed sales. Also by law, you are allowed to receive a copy of the completed appraisal report from your lending agency. Contact us if you have any concerns about the appraisal process.
Myth: Market value must be the same as the assessed value of the property.
Fact: While most states back the idea that assessed value is the same as estimated market value, this generally is not the case. There are times when interior remodeling has occurred and the assessor is not aware of the improvement or other houses in the area have not been reassessed for a good length of time, it may vary wildly.
Myth: The value of a house will change depending upon whether the appraisal is provided for the buyer or the seller.
Fact: The appraiser has no vested interest in the result of the appraisal report and should complete services with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: Any time market value is found, it should equate to the replacement cost of the home.
Fact: The way market value is derived is based on what a home buyer would be willing to pay a willing seller for a home without being under pressure from any external party to buy or sell. If the house were reconstructed, the dollar amount required to do so would set the replacement cost.
Myth: Appraisers use a formula, such as a specific price per square foot, to conclude the worth of a house.
Fact: There are many different calculations that an appraiser will use to make an in-depth investigation of every factor pertaining to the house, such as the size, location, condition, how close it is to undesirable facilities and the value of recently sold comparable houses.
Myth: When the economy is robust and the cost of homes are reported to be rising by a certain percentage, the other houses in the area can be expected to rise based on that same percentage.
Fact: Value increase of a specific property must be concluded on an individualized basis, factoring in data on comparable houses and other relevant specifications within the home itself. This is true in good economic times as well as bad.
Have other questions about appraisers, appraising or real estate in Howard County or Columbia, MD?Contact us
Myth: The property's outside is determinate of the actual price of the property; it is unnecessary to do an interior appraisal.
Fact: House worth is concluded by a number of factors, including location, condition, improvements, amenities, and market trends. An exterior inspection obviously can't provide all of the data necessary.
Myth: Because consumers fund appraisal reports when applying for loans to purchase or refinance their house, they legally own their appraisal report.
Fact: The appraisal is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the appraisal report. However, consumers have to be supplied with a copy of the appraisal report upon written request, through the Equal Credit Opportunity Act.
Myth: There's no point for home buyers to even care about what the report contains so long as their lending company is fine with the contents therein.
Fact: Only if home buyers read a copy of their report can they verify its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of information contained in an appraisal that should be useful to the consumer in the future, such as 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 region.
Myth: The only reason someone would hire an appraiser is if a home needs its worth assessed in a lender-based sales transaction.
Fact: Appraisers can have many different qualifications and designations which allow them to provide a lot of different services including - but not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: An appraisal report is the same as a home inspection.
Fact: A home inspection report has a completely different purpose than an appraisal report. The job of the appraiser is to find an opinion of value in the appraisal process and through producing the report. A home inspector analyzes the condition of the home and its main components and reports these findings.