Myth: Assessed value should be equal to market value.
Reality: While most states back the suggestion that assessed value equates estimated market value, this usually is not the case.
Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby properties are excellent examples of why the price can vary.
Myth: Depending on whether the appraisal is written for the buyer or the seller, the value of the home will vary.
Reality: The appraiser has no personal interest in the outcome of the appraisal report and should complete his task with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Market value will equal replacement cost.
Reality: Without any suggestion from any different parties to buy or sell, market value is what a willing buyer would pay a willing seller for a specific property.
The dollar amount necessary to rebuild a home is what shows the replacement cost.
Myth: Appraisers use a calculation, such as a specific price per square foot, to arrive at the value of a house.
Reality: There are many varied ways that an appraiser will use to make a comprehensive analysis of every factor pertaining to the house, such as the size, location, condition, how close it is to undesirable facilities and the values of recently sold comparable houses.
Myth: In a powerful economy - when the prices of houses in a given neighborhood are found to be rising by a certain percentage - the values of individual homes in the proximity can be expected to increase by that same percentage.
Reality: Any value an appraiser derives in regards to a particular property is always individualized, based on certain factors derived from the data of comparable properties and other specifications within the house itself.
It doesn't matter if the economy is doing well or declining.
Myth: Just looking at what the home looks like on the outside gives a good idea of its value.
Reality: To conclude an accurate value beyond all doubt, an appraiser must examine the home on a variety of factors based on area, condition, improvements, amenities, and market trends.
An exterior inspection definitely can't provide all of the data required.
Myth: Because consumers pay for the appraisal when applying for loans to buy or refinance real estate, they own their appraisal report.
Reality: The report is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the report.
However, consumers must be supplied with a copy of the document upon written request, under the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the appraisal so long as it satisfies the requirements of their lending company.
Reality: It is a very good idea for consumers to go through a copy of their appraisal report so that they can double-check the accuracy of the report, in case it's required to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make.
There is an incredible amount of information contained in an appraisal report that should 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 proximity.
Myth: Appraisers are hired only to assess home values in property sales involving mortgage-lending deals.
Reality: Appraisers can have many varied qualifications and designations which allow them to perform a lot of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: There's no reason to get an appraisal if you have had a home inspection.
Reality: An appraisal does not fulfill the same purpose as an inspection report.
The purpose of an appraisal report is to find an opinion of market value during the appraisal process and the production of the report.
House inspectors will compose a report that will express the condition of the home and its major components and possible damage.
