Myth: The value that is ascertained by the appraiser should be the same as the market value.
Reality: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always. Interior reconstruction that the assessor is not aware of and a dearth of reassessment on nearby properties are exact examples of why the price can vary.
Myth: The buyer or the seller sometimes may have leverage in the cost of the house depending upon for whom the appraiser is working.
Reality: The appraiser has no vested interest in the outcome of the report and should conduct his task with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Any time market value is calculated, it should match the replacement cost of the property.
Reality: Without any influence from any external parties to buy or sell, market value is what a willing buyer would pay a willing seller for a particular property. If the home were rebuilt, the dollar amount required to do so would make up the replacement cost.
Myth: Appraisers use a formula, like a specific price per square foot, to figure out the value of a home.
Reality: Appraisers make an exhaustive analysis of all factors in consideration to the value of a home, including its location, condition, size, proximity to facilities and recent values of comparable properties.
Myth: When the economy is doing well and the sales prices of homes are found to be increasing by a certain percentage, the other houses in the vicinity can be expected to appreciate based on that same percentage.
Reality: All increase of value is on a case-by-case basis, found by information on relevant conditions and the data of comparable homes. It makes no difference whether the economy is robust or on the decline.
Myth: You can usually find what a property is worth simply by looking at the outside.
Reality: Property value is determined by a number of variables, including - but not limited to - location, condition, improvements, amenities, and market trends. As you can see, none of these variables can be found simply by examining the house from the exterior.
Myth: Considering that the consumer is the party who provides the funding to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal belongs to them.
Reality: Legally, the appraisal report is owned by the lending company unless the lender relinquishes their interest in the report. Home buyers must be supplied with a copy of the report through request because of the Equal Credit Opportunity Act.
Myth: It doesn't matter to consumers what's in the appraisal so long as it satisfies the necessities of their lending company.
Reality: It is very important for home buyers to peruse a copy of their report so that they can double-check the accuracy of the document, in case they need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes an invaluable record for future reference, containing helpful and often-revealing data - including 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 assess home values in property sales involving mortgage-lending deals.
Reality: Appraisers can have many varied qualifications and designations which allow them to provide a lot of different services including - but not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: An appraisal is no different than a home inspection.
Reality: An appraisal report does not fulfill the same purpose as an inspection. The reason behind an appraisal is to conclude upon an opinion of market value during the appraisal process and the production of the appraisal. The point of a home inspector is to approximate the condition of the house and its main components, then create a report on these conclusions.
