Myth: Market value will be similar to the assessed value of the property.
Reality: While most states uphold the concept that assessed value is equal to estimated market value, this generally is not the case.
Examples include when interior reconstruction has occurred and the assessor is unaware of the improvements, or when houses in the vicinity have not been reassessed for an prolonged time.
Myth: The buyer or the seller sometimes may have leverage in the value of the house depending upon for whom the appraiser is working.
Reality: The appraiser has no vested interest in the outcome of the appraisal and should render his job with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: Any time market value is calculated, it should equal the replacement cost of the house.
Reality: Market value is found by what a willing buyer would likely pay a willing seller for a specific property, with neither being under pressure to buy or sell.
If the property were rebuilt, the dollar amount necessary to do so would form the replacement cost.
Myth: There are specific ways that appraisers use to find the cost of a house, such as the price per square foot.
Reality: There are many different processes that an appraiser will use to make a full analysis of every factor pertaining to the home, such as the size, location, condition, how close it is to certain facilities and the sales prices of recently sold comparable houses.
Myth: As houses increase in value by a specific percentage - in a strong economy - the properties in proximity are figured to appreciate by the same amount.
Reality: Any value an appraiser reports in regards to a certain house is always personalized, based on certain factors derived from the information of comparable properties and other considerations within the property itself.
This is true in excellent economic times as well as poor.
Myth: Just examining what the house looks like on the outside gives a good idea of its value.
Reality: To conclude a solid value beyond all doubt, an appraiser must assess the property on a variety of factors based on area, condition, improvements, amenities, and market trends.
An exterior inspection obviously can't provide all of the information needed.
Myth: Since 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, by law the appraisal is theirs.
Reality: Legally, the appraisal report is owned by the lending agency unless the lender releases their interest in the appraisal.
Because of the Equal Credit Opportunity Act, any home buyer demanding a copy of the report must be given it by their lender.
Myth: It doesn't concern consumers what's in the appraisal so long as it meets the necessities of their lending company.
Reality: Only when consumers examine a copy of their 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.
An appraisal can serve as a record for the future, containing a great deal of data - 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 vicinity.
Myth: Appraisals are ordered only to estimate real estate property values in home sales involving mortgage-lending transactions.
Reality: Ordering an appraisal can fulfill a variety of necessities 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: There's no need to get an appraisal if you order a home inspection.
Reality: A home inspection report has a completely different purpose than an appraisal.
The function of an appraisal report is to find an opinion of market value during the appraisal process and the production of the appraisal.
The task of a home inspector is to assess the condition of the house and its major components, then write a report on their conclusions.