Myth: Assessed value will always be similar to market value.
Reality: While most states uphold the concept that assessed value is equal to estimated market value, this usually is not the case.
Examples include when interior remodeling has happened and the assessor is unaware of the improvements, or when houses in the vicinity have not been reassessed for an prolonged period.
Myth: The opinion of value of a property will differ depending upon if the appraisal is produced for the buyer or the seller.
Reality: There is no vested interest on the part of the appraiser in the outcome of the report, therefore he will complete his work with impartiality and independence, regardless of for whom the appraisal is ordered.
Myth: Market value will equate to replacement cost.
Reality: Market value is based on what a willing buyer would likely pay a willing seller for a certain house, with neither being under undue influence to buy or sell.
The replacement cost is the dollar amount required to rebuild a property in-kind.
Myth: There are specific ways that real estate appraisers use to show the opinion of value of a home, such as the price per square foot.
Reality: There are many numerous formulae that an appraiser will use to make an in-depth investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to certain facilities and the values of recently sold comparable homes.
Myth: In a strong economy - when the values of houses in a given neighborhood are reported to be increasing by a certain percentage - the prices of individual houses in the area can be expected to increase by that same percentage.
Reality: An increase in value of a certain property must be concluded on a case-by-case basis, factoring in information on comparable homes and other relevant elements.
This is true in strong economic times as well as bad.
Myth: You can usually tell what a home is worth simply by looking at the outside.
Reality: To determine a definite value beyond all doubt, an appraiser must examine the property on a variety of factors based on area, condition, improvements, amenities, and market trends.
There's no real way to get all of this information from simply viewing the property from the exterior.
Myth: Because consumers fund appraisals when applying for loans to purchase or refinance their property, they own their appraisal.
Reality: The document is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the appraisal.
Due the Equal Credit Opportunity Act, any home buyer requesting a copy of the document must be provided with it by their lending agency.
Myth: It doesn't concern consumers what's in the report so long as it meets the necessities of their lending agency.
Reality: Only when home buyers look over a copy of their appraisal report can they verify its accuracy and know if they should ask questions. Remember, this is probably the most expensive and important investment a consumer will ever make.
There is a great deal of information contained in a report that should be useful to the home buyer 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 order an appraisal is if a house needs its value estimated in a lender sales transaction.
Reality: Based upon their qualifications and designations, appraisers can and will provide a lot of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A property inspection serves the same purpose as an appraisal.
Reality: Appraisal reports have almost nothing in common with a home inspection report.
An appraiser finds an opinion of value in the appraisal process and resulting report.
A home inspector assesses the condition of the home and its main components and reports their findings.
