Myth: The value that is assessed by the appraiser will be the same as the market value.
Reality: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. Interior remodeling that the assessor has not investigated and a dearth of reassessment on nearby properties are excellent examples of why there might be a differential in price.
Myth: The opinion of value of a property will vary depending upon if the appraisal is ordered for the buyer or the seller.
Reality: The appraiser has no vested interest in the result of the appraisal report and should render his task with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Market value should equate to replacement cost.
Reality: The way market value is found is based on what a buyer would be willing to pay a willing seller for a house without being under influence from any outside party to purchase or sell. The dollar amount needed to rebuild a property is what constitutes the replacement cost.
Myth: Certain methods, like the price per square foot of the property, are the ways appraisers use to determine the value of a home.
Reality: There are many varied calculations that an appraiser will use to make a full investigation of every factor pertaining to the property, such as the size, location, condition, how close it is to certain facilities and the sales prices of recently sold comparable properties.
Myth: As homes increase in value by a certain percentage - in a robust economy - the homes in proximity are expected to increase by the same amount.
Reality: Any value an appraiser reports concerning a specific home is always personalized, based on certain factors pulled from the data of comparable homes and other specifications within the home itself. It makes no difference whether the economy is strong or poor.
Myth: Just looking at what the property looks like on the outside gives an idea of its value.
Reality: Property value is determined by a multitude of variables, including area, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from simply inspecting the home from the outside.
Myth: Because consumers pay for appraisal reports when applying for loans to purchase or refinance real estate, they legally own their appraisal report.
Reality: Legally, the document is owned by the lender unless the lender relinquishes their interest in the report. Under the Equal Credit Opportunity Act, any consumer requesting a copy of the report must be provided with one by their lender.
Myth: It doesn't concern consumers what's in the report so long as it satisfies the requirements of their lending company.
Reality: Only when consumers look at a copy of their appraisal report 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. There is a wealth of information stored in a report that can be useful to the consumer 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 area.
Myth: There is no reason to order an appraisal unless you are trying to get an assessment of the value of a property during a sales transaction involving a lending institution.
Reality: Hiring an appraiser can fulfill a variety of necessities depending on the designations and certifications of the appraiser involved; appraisers can provide a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: An appraisal is no different than a home inspection report.
Reality: An appraisal does not serve the same purpose as an inspection. The purpose of the appraiser is to arrive at an opinion of value in the appraisal process and through producing the report. The task of a home inspector is to assess the condition of the home and its major components, then write a report on these conclusions.
