Appraisal myths & facts
It is enforced by the government that an appraiser needs to be state-licensed to create appraisals for federally-supported property transactions in Illinois. The law entitles you to receive a copy of your finished appraisal from your lending agency after it has been provided. Contact Sutherland Appraisal Services, Inc. if you have any questions about the appraisal process.
Myth: Assessed value should be the same as to market value.
Fact: It could be that Illinois, like most states, supports the common myth that the assessed value equates to the market value; however, this is not often the case. Sometimes when interior remodeling has occurred and the assessor is not aware of the improvement or other houses in the area have not been reassessed for years or more, it may vary wildly.
Myth: The buyer or the seller can have leverage in the cost of the property depending upon for whom the appraiser is working.
Fact: There is no vested interest on the part of the appraiser in the result of the analysis, therefore he will complete his work with impartiality and independence, despite for whom the appraisal is ordered.
Myth: The replacement value of the home will be is on par with the market value.
Fact: The way market value is found is based on what a buyer would likely pay a willing seller for a property without being under pressure from any outside group to purchase or sell. The replacement cost is the dollar amount needed to reconstruct a house in-kind.
Myth: Appraisers use a calculation, such as a specific price per square foot, to come to the cost of a house.
Fact: Appraisers make a detailed analysis of all factors pertaining to the value of a home, including its location, condition, size, proximity to facilities and recent values of comparable homes.
Myth: When the economy is doing well and the sales prices of homes are found to be appreciating by a certain percentage, the other properties in the vicinity can be expected to rise based on that same percentage.
Fact: Any cost at which an appraiser concludes concerning a particular house is always individualized, based on certain factors derived from the data of comparable properties and other specifications within the property itself. It doesn't matter if the economy is on the rise or declining.
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Myth: The property's exterior is determinate of the actual worth of the home; there is no need to do an interior appraisal.
Fact: To find an accurate worth beyond all doubt, an appraiser must assess the home 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 viewing the house from the outside.
Myth: Since the consumer is the one who provides the capital to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.
Fact: Unless a lender releases its vestment in the appraisal report, it is legally owned by the lending company that ordered the appraisal. By the Equal Credit Opportunity Act, any consumer demanding a copy of the appraisal report must be given it by their lending company.
Myth: There's no reason for consumers to even care about what the appraisal report contains so long as their lending institution is fine with the contents therein.
Fact: A consumer should definitely look through their appraisal report; there will probably be some questions or some concerns about the accuracy of the appraisal that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of data stored in an appraisal that will probably 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 vicinity.
Myth: Appraisals are ordered only to estimate building values in property sales involving mortgage-lending transactions.
Fact: Appraisers can have many different qualifications and designations which allow them to perform a variety 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 report is the same as a home inspection.
Fact: A home inspection report has a completely different purpose than an appraisal report. The purpose of the appraiser is to find an opinion of value in the appraisal process and through writing the report. House inspectors will produce a report that will explain the condition of the house and its major components and possible damage.