Appraisal myths debunked
It is required by legal agencies that an appraiser needs to be state-licensed to write appraisals for federally-related real estate purchases in California. Also by law, you have the ability to receive a copy of the finished appraisal report from your lending agency. Contact Premier Appraisal of SoCal if you have any concerns about the appraisal procedure.
Myth: Assessed value should be similar to to market value.
Fact: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. Examples include when interior reconstruction has occurred and the assessor does not know about the improvements, or when homes in the area have not been reassessed for an extended time.
Myth: The value of a property will change depending upon if the appraisal is produced for the buyer or the seller.
Fact: The appraiser has no personal interest in the result of the report and should complete services with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Market value should equate to replacement cost.
Fact: Without any influence from any outside parties to buy or sell, market value is what a willing buyer would pay a willing seller for a specific property. Replacement cost is the dollar amount necessary to reconstruct a home in-kind.
Myth: Specific methods, like the price per square foot of the property, are the methods appraisers use to come to the worth of a property.
Fact: There are many different processes that an appraiser will use to make a detailed investigation of every factor in consideration of the property, such as the size, location, condition, how close it is to specific facilities and the value of recently sold comparable houses.
Myth: When the economy is strong and the sales prices of properties are found to be rising by a certain percentage, the other properties in the neighborhood can be expected to rise based on that same percentage.
Fact: All appreciation of value is on an individual basis, found by information on relevant conditions 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 home's exterior is determinate of the actual value of the property; it is unnecessary to do an interior appraisal.
Fact: House value is determined by a number of factors, including location, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from simply examining the property from the exterior.
Myth: Because the consumer is the one who puts up the capital to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal is theirs.
Fact: The appraisal is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the report. Because of the Equal Credit Opportunity Act, any consumer requesting a copy of the report must be provided with one by their lending agency.
Myth: It doesn't mean anything to consumers what's in the appraisal so long as it satisfies the needs of their lending company.
Fact: A consumer should definitely read through their report; there could be some questions or some worries with the accuracy of the report that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can serve as a record for the future, since it contains a great deal of information - 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 house needs its value estimated in a lender sales transaction.
Fact: Ordering an appraisal can fulfill a variety of requirements depending on the designations and certifications of the appraiser involved; appraisers can perform a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: A home inspection serves the same purpose as an appraisal.
Fact: Appraisal reports are completely different than a home inspection. The task of the appraiser is to arrive at an opinion of value in the appraisal process and through creating the report. House inspectors will produce a report that will explain the condition of the house and its major components and possible damage.