Appraisal myths debunked
It is enforced by law that an appraiser must be state-licensed to produce appraisals for federally-related real estate transactions in California. You also have the right to acquire a copy of the finished appraisal report from your lender. Contact Premier Appraisal of SoCal if you have any questions about the appraisal procedure.
Myth: Market value must be similar to the assessed value of the property.
Fact: It is possible that California, like most states, supports the idea that the assessed value equates to the market value; however, this is sometimes the exception rather than the rule. Examples include when interior remodeling has occurred and the assessor has not seen the improvements, or when properties in the area have not been reassessed for an extended period.
Myth: Depending on whether the appraisal is done for the buyer or the seller, the appraised value of the house will vary.
Fact: The opinion of value of the house does not affect the salary of the appraiser; as such, the appraiser has no preconceived interest in the value of the property. Obviously, he will render services with impartiality and objectivity regardless for whom the appraisal is conducted.
Myth: Any time market value is established, it should equate to the replacement cost of the home.
Fact: Market value is based on what a willing buyer would be interested in paying a willing seller for a particular home, with neither being under pressure to buy or sell. The dollar amount necessary to reconstruct a home is what forms the replacement cost.
Myth: Certain formulae, like the price per square foot of the property, are what appraisers use to ascertain the price of a property.
Fact: Appraisers complete a full analysis of all factors pertaining to the value of a home, including its location, condition, size, proximity to facilities and recent sale prices of comparable properties.
Myth: When the economy is doing well and the cost of homes are found to be rising by a certain percentage, the other properties in the area can be expected to rise based on that same percentage.
Fact: All increase of value is on a case-by-case basis, concluded by data on relevant considerations and the data of comparable homes. It makes no difference whether the economy is robust or on the decline.
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Myth: The house's exterior is determinate of the actual worth of the property; there is no need to do an interior inspection.
Fact: To find an accurate price beyond all doubt, an appraiser must examine the property on a variety of factors based on area, condition, improvements, amenities, and current market trends. An outside-only inspection definitely can't provide all of the information necessary.
Myth: Because consumers fund appraisal reports when applying for loans to purchase or refinance their home, they legally own their appraisal.
Fact: Unless a lender releases its vestment in the report, it is legally owned by the lending agency that ordered the appraisal. However, consumers must be given a copy of the appraisal report upon written request, due to the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the report so long as it meets the needs of their lending company.
Fact: A home buyer should definitely inspect their appraisal report; there may be some questions or some concerns 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. Also, the appraisal report makes an invaluable record for future reference, containing useful and often-revealing data - 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 area.
Myth: Appraisals are ordered only to assess real estate property values in house sales involving mortgage-lending deals.
Fact: Appraisers can have many different qualifications and designations which allow them to provide a series 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: An appraisal report is the same as a home inspection report.
Fact: Appraisal reports are nothing like a home inspection. The job of the appraiser is to come to an opinion of value in the appraisal process and through producing the report. The purpose of a home inspector is to approximate the condition of the house and its main components, then provide a report on their inspection.