Myth: Market value will always be the same as the assessed value of the property.
Reality: While most states back the concept that assessed value is the same as estimated market value, this commonly is not the case. Interior remodeling that the assessor is not aware of and a dearth of reassessment on nearby houses are prime examples of why this occurs.
Myth: The buyer or the seller sometimes may have some pull in the cost of the property depending upon for whom the appraiser is working.
Reality: The cost of the home does not affect the pay of the appraiser; as such, the appraiser has no vested interest in the opinion of value of the property. What this means is he will complete his services with impartiality and objectivity regardless of for whom the appraisal is produced.
Myth: Market value will equal replacement cost.
Reality: 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 influence from any external group to buy or sell. If the property were rebuilt, the dollar amount necessary to do so would set the replacement cost.
Myth: Appraisers use a formula, like a certain price per square foot, to conclude the value of a home.
Reality: Appraisers complete a comprehensive analysis of all factors in consideration to the value of a home, including its location, condition, size, proximity to facilities and recent values of comparable properties.
Myth: When the economy is strong and the sales prices of properties are found to be rising by a certain percentage, the other houses in the neighborhood can be expected to increase based on that same percentage.
Reality: An increase in value of a specific home has to be determined on a case-by-case basis, factoring in data on comparable homes and other relevant specifications within the property itself. It doesn't matter if the economy is doing well or declining.
Myth: The home's outside is determinate of the actual value of the house; there is no need to do an interior appraisal.
Reality: Home value is concluded by a multitude of factors, including area, condition, improvements, amenities, and market trends. Obviously, none of these variables can be found simply by looking at the house from the exterior.
Myth: Because consumers fund the appraisal when applying for loans to purchase or refinance their property, they legally own their appraisal.
Reality: The appraisal is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the appraisal. However, consumers must be provided with a copy of the document upon written request, under the Equal Credit Opportunity Act.
Myth: Consumers need not be concerned with what is in their appraisal report so long as it exceeds the necessities of their lending agency.
Reality: Only when consumers look through a copy of their appraisal can they ensure its accuracy and know if they should ask questions. 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, filled with helpful 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 proximity.
Myth: Appraisals are ordered only to estimate home values in home sales involving mortgage-lending deals.
Reality: Appraisers can have many different qualifications and designations which allow them to perform a variety of different services including - but certainly 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.
Reality: Appraisal reports are nothing like a home inspection report. An appraiser decides upon an opinion of value in the appraisal process and resulting appraisal report. A home inspector determines the condition of the home and its main components and reports these findings.
