Appraisal myths debunked
By law, an appraiser is enforced to be state-licensed to produce appraisals for federally-related transactions. Also by law, you are entitled to receive a copy of the completed appraisal from your lending agency. Contact us if you have any concerns about the appraisal procedure.
Myth: Assessed value should always equate to market value.
Fact: 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 reconstruction that the assessor has not investigated and a dearth of reassessment on nearby properties are perfect examples of why this occurs.
Myth: Depending on whether the appraisal is done for the buyer or the seller, the opinion of value of the home will vary.
Fact: The cost of the house does not affect the salary of the appraiser; as such, the appraiser has no preconceived interest in the cost of the house. Obviously, he will provide task with impartiality and objectivity regardless for whom the appraisal is produced.
Myth: The replacement cost of the home is always is on par with the market value.
Fact: The way market value is arrived at is based on what a home buyer would be willing to pay a willing seller for a property without being under pressure from any outside party to buy or sell. If the home were reconstructed, the dollar amount needed to do so would form the replacement cost.
Myth: There are certain methods that real estate appraisers use to determine the opinion of value of a property, like the price per square foot.
Fact: Appraisers make an exhaustive analysis of all factors in consideration to the value of a property, including its location, condition, size, proximity to facilities and recent values of comparable houses.
Myth: In a powerful economy - when the values of homes in a given area are reported to be increasing by a particular percentage - the worth of individual properties in the vicinity can be expected to rise by that same percentage.
Fact: All increase of price is on a one-on-one basis, concluded by information on relevant conditions and the data of comparable properties. This is true in excellent economic times as well as bad.
Have other questions about appraisers, appraising or real estate in Dupage County or Naperville, IL?Contact our professional staff
Myth: Just seeing what the property looks like on its exterior gives a good idea of its worth.
Fact: To find an accurate price beyond all doubt, an appraiser must inspect the property on a variety of factors based on area, condition, improvements, amenities, and current market trends. There's no possible way to get all of this data from simply looking at the property from the outside.
Myth: Since you're the one funding for the appraisal when applying for your loan to purchase or refinance your home, you own the produced appraisal report.
Fact: The document is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the document. Under the Equal Credit Opportunity Act, any home buyer requesting a copy of the report must be provided with it by their lending company.
Myth: Home buyers need not be concerned with what is in their appraisal document so long as it satisfies the needs of their lending company.
Fact: Only if consumers examine a copy of their appraisal report can they ensure its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of information stored in an report that could be useful to the home buyer 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: The only reason someone would order an appraisal is if a house needs its worth assessed in a lender sales transaction.
Fact: Appraisers can have many different qualifications and designations which allow them to perform a multitude 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: An appraisal report is no different than a home inspection.
Fact: Appraisal reports are completely different than a home inspection. The function of an appraisal report is to arrive at an opinion of fair market value during the appraisal process and the completion of the appraisal report. House inspectors will produce a report that will explain the condition of the house and its major components and possible damage.