Appraisal myths debunked
It is required by law that a real estate appraiser must be state-licensed to perform appraisals for federally-supported real estate purchases in Washington. Also by law, you have the ability to request a copy of the finished report from your lending agency. Contact Crest Appraisal Services if you have any questions about the appraisal procedure.
Myth: Assessed value will always be similar to to market value.
Fact: While most states uphold the suggestion that assessed value is the same as estimated market value, this often is not the case. Examples include when interior remodeling has occurred and the assessor does not know about the improvements, or when houses in the area have not been reassessed for an prolonged period of time.
Myth: Depending on if the appraisal is drawn up for the buyer or the seller, the value of the home will vary.
Fact: There is no personal interest on the part of the appraiser in the outcome of the analysis, therefore he will complete his work with impartiality and independence, despite for whom the appraisal is written.
Myth: Any time market value is established, it should equal the replacement cost of the house.
Fact: Market value is based on what a willing buyer would be interested in paying a willing seller for a specific home, with neither being under duress to buy or sell. The replacement cost is the dollar amount needed to reconstruct a home in-kind.
Myth: Specific methods, like the price per square foot of the property, are what appraisers use to ascertain the price of a house.
Fact: There are many numerous ways that an appraiser will use to make a full investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to undesirable facilities and the sales price of recently sold comparable houses.
Myth: In a powerful economy - when the values of houses in a given neighborhood are reported to be rising by a particular percentage - the costs of individual properties in the area can be expected to appreciate by that same percentage.
Fact: Price increase of a specific house has to be determined on a case-by-case basis, factoring in information on comparable homes and other relevant specifications within the home itself. This is true in fair economic times as well as poor.
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Myth: Just looking at what the property looks like on the outside gives an idea of its cost.
Fact: There are a multitude of different variables that determine the value of a home; these factors include area, condition, improvements, amenities, and market trends. As you can see, none of these things can be derived just by inspecting the property from the outside.
Myth: Since the consumer is the one who puts up the capital to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal is theirs.
Fact: Unless a lender releases its interest in the document, it is legally owned by the lending agency that ordered the appraisal. Due the Equal Credit Opportunity Act, any home buyer demanding a copy of the document must be provided with one by their lender.
Myth: It doesn't matter to consumers what's in the appraisal report so long as it satisfies the needs of their lending company.
Fact: It is very important for consumers to go through a copy of their appraisal report so that they can double-check the accuracy of the document, in case it's required to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can double as a record for the future, since it contains an exorbitant amount of data - including, but certainly 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 proximity.
Myth: Appraisers are hired only to assess real estate property values in home sales involving mortgage-lending deals.
Fact: Appraisers can have many different qualifications and designations which allow them to provide a variety of different services including - but definitely 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 report.
Fact: An appraisal does not fulfill the same purpose as an inspection report. An appraiser concludes on an opinion of value in the appraisal process and resulting report. House inspectors will compose a report that will show the condition of the house and its major components and possible damage.