Myth: Assessed value will always be equal to market value.
Reality: While most states uphold the concept that assessed value is the same as estimated market value, this often is not the case. Interior reconstruction that the assessor is not aware of and a lack of reassessment on nearby houses are prime examples of why this occurs.
Myth: The buyer or the seller can have impact in the cost of the home depending upon for whom the appraiser is working.
Reality: The appraiser has no vested interest in the result of the appraisal report and should complete services with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Market value should be the same as replacement cost.
Reality: Market value is derived from what a willing buyer would be interested in paying a willing seller for a particular home, with neither being under undue influence to buy or sell. The dollar amount demanded to rebuild a property is what shows the replacement cost.
Myth: There are certain methods that appraisers use to show the value of a house, such as the price per square foot.
Reality: Appraisers make an exhaustive analysis of all factors in consideration to the value of a house, including its location, condition, size, proximity to facilities and recent values of comparable houses.
Myth: When the economy is strong and the sales prices of houses are reported to be increasing by a certain percentage, the other properties in the proximity can be expected to appreciate based on that same percentage.
Reality: Any value an appraiser derives in regards to a particular home is always personalized, based on certain factors concluded from the data of comparable homes and other specifications within the property itself. It doesn't matter if the economy is on the rise or declining.
Myth: Just examining what the house looks like on its exterior gives a good idea of its value.
Reality: To find a concrete value beyond all doubt, an appraiser must assess the property on a variety of factors based on location, condition, improvements, amenities, and current market trends. An exterior inspection definitely can't provide all of the information needed.
Myth: Because consumers pay for appraisals when applying for loans to purchase or refinance their home, they own their appraisal.
Reality: Legally, the appraisal is owned by the lender unless the lender relinquishes their interest in the document. However, home buyers have to be supplied with a copy of the document upon written request, because of the Equal Credit Opportunity Act.
Myth: There's no point for home buyers to even worry about what the appraisal report contains so long as their lending institution is fine with the contents therein.
Reality: Only when consumers check out 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. There is a great deal of information contained in an appraisal 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 area.
Myth: Appraisers are hired only to estimate building values in house sales involving mortgage-lending transactions.
Reality: Based upon their qualifications and designations, appraisers can and may perform a lot of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: You don't need to get an appraisal if you order a home inspection.
Reality: A home inspection has a completely different purpose than an appraisal. The purpose of the appraiser is to find an opinion of value in the appraisal process and through producing the report. A home inspector determines the condition of the house and its main components and reports these findings.
