Common myths about appraising
By law, an appraiser needs to be state-licensed to produce appraisals for federally-related purchases. Also by law, you have the ability to demand a copy of the finished report from your lender. Contact us if you have any concerns about the appraisal process.
Myth: The value that is ascertained by the appraiser must be equivalent to the market value.
Fact: While most states support the concept that assessed value approximates estimated market value, this commonly is not the case. Interior reconstruction that the assessor has not investigated and a lack of reassessment on nearby properties are exact examples of why the price can vary.
Myth: The buyer or the seller can have an influence in the value of the house depending upon for whom the appraiser is working.
Fact: There is no real interest on the part of the appraiser in the result of the appraisal, therefore he will complete his work with impartiality and independence, despite for whom the appraisal is written.
Myth: Any time market value is found, it should equal the replacement cost of the home.
Fact: Market value is based on what a willing buyer would be interested in paying a willing seller for a particular house, with neither being under pressure to buy or sell. The dollar amount demanded to reconstruct a home is what constitutes the replacement cost.
Myth: Certain formulae, such as the price per square foot, are the methods appraisers use to come to the price of a house.
Fact: There are many different ways that an appraiser will use to make a full investigation of every factor in consideration of the home, such as the size, location, condition, how close it is to specific facilities and the opinion of value of recently sold comparable homes.
Myth: In a robust economy - when the costs of homes in a given county are found to be rising by a certain percentage - the costs of individual houses in the area can be expected to increase by that same percentage.
Fact: All appreciation of worth is on an individual basis, concluded by data on relevant conditions and the data of comparable properties. It doesn't matter if the economy is on the rise or declining.
Have other questions about appraisers, appraising or real estate in Dupage County or Naperville, IL?Contact us
Myth: The home's outside is determinate of the actual value of the home; there is no need to do an interior appraisal.
Fact: There are a number of different factors that determine property value; these factors include area, condition, improvements, amenities, and market trends. Obviously, none of these things can be derived just by viewing the home from the exterior.
Myth: Because consumers fund appraisal reports when applying for loans to purchase or refinance real estate, they legally own their appraisal report.
Fact: Legally, the document is owned by the lending agency unless the lender releases their interest in the report. Consumers must be given a version of the document through request due to the Equal Credit Opportunity Act.
Myth: Consumers need not worry about what is in their appraisal document so long as it exceeds the requirements of their lending agency.
Fact: A consumer should definitely look through their appraisal report; there could be some questions or some worries about the accuracy of the analysis that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can double as a record for the future, since it contains an exorbitant amount of information - including, but not limited to 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: Appraisals are ordered only to estimate building values in property sales involving mortgage-lending deals.
Fact: Depending upon their qualifications and designations, appraisers can and often do perform a multitude of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A house inspection serves the same purpose as an appraisal.
Fact: Appraisal reports have almost nothing in common with a home inspection report. The point of an appraisal is to find an opinion of fair market value during the appraisal process and the production of the appraisal report. A home inspector analyzes the condition of the home and its major components and reports these findings.