Myth: Assessed value generally will be similar to market value.
Reality: While most states uphold the idea that assessed value equates estimated market value, this generally is not the case.
Interior remodeling that the assessor is unaware of and a lack of reassessment on nearby homes are excellent examples of why this occurs.
Myth: The opinion of value of a property will differ depending upon if the appraisal is conducted for the buyer or the seller.
Reality: There is no real interest on the part of the appraiser in the outcome of the appraisal report, therefore he will conduct his work with impartiality and independence, despite of for whom the appraisal is written.
Myth: The replacement value of the house will be on par with the market value.
Reality: Without any suggestion from any different parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a specific home.
The dollar amount needed to rebuild a property is what shows the replacement cost.
Myth: Certain methods, like the price per square foot, are what appraisers use to arrive at the value of a home.
Reality: Appraisers complete an exhaustive analysis of all factors in consideration to the value of a home, including its location, condition, size, proximity to facilities and recent sale prices of comparable properties.
Myth: In a strong economy - when the values of homes in a given county are reported to be rising by a certain percentage - the prices of individual homes in the area can be expected to rise by that same percentage.
Reality: All increase of value is on a case-by-case basis, determined by information on relevant conditions and the data of comparable properties.
It makes no difference whether the economy is strong or bad.
Myth: Just seeing what the property looks like on the outside gives an excellent idea of its value.
Reality: To find a solid value beyond all doubt, an appraiser must examine the home on a variety of factors based on location, condition, improvements, amenities, and market trends.
An external inspection definitely can't provide all of the information necessary.
Myth: Since you're the one coughing up the cash for the appraisal when applying for your loan to purchase or refinance your house, you own the produced appraisal.
Reality: The appraisal report is, in fact, legally owned by the lender - unless the lender "releases its interest" in the appraisal.
However, home buyers have to be given a copy of the document upon written request, under the Equal Credit Opportunity Act.
Myth: There's no reason for consumers to even care about what the appraisal report contains so long as their lending company is fine with the contents therein.
Reality: A home buyer should definitely look through their appraisal; there might be some questions or some concerns about the accuracy of the analysis that need to be addressed. 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 can 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 home needs its value estimated in a lender-based sales transaction.
Reality: Depending upon their qualifications and designations, appraisers can and do provide a variety of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A home inspection serves the same purpose as an appraisal.
Reality: Appraisal reports have almost nothing in common with a home inspection.
The point of an appraisal is to find an opinion of market value during the appraisal process and the completion of the report.
A home inspector determines the condition of the home and its main components and reports their findings.
