Appraisal myths & facts
It is required by the government that an appraiser needs to be state-licensed to produce appraisals for federally-related home sales in Washington. You have the ability to demand a copy of the finished report from your lending agency. Contact Crest Appraisal Services if you have any concerns about the appraisal process.
Myth: The value that is assessed by the appraiser should be exactly the same as the market value.
Fact: While most states uphold the suggestion that assessed value approximates estimated market value, this commonly is not the case. Sometimes when interior remodeling has occurred and the assessor is unaware of the improvement or other homes in the area have not been reassessed for years or more, it may vary wildly.
Myth: The opinion of value of a property will be different depending upon whether the appraisal is ordered for the buyer or the seller.
Fact: There is no vested interest on the part of the appraiser in the outcome of the report, therefore he will conduct his work with impartiality and independence, despite for whom the appraisal is ordered.
Myth: Market value should be the same as replacement cost.
Fact: Without any influence from any external parties to buy or sell, market value is what a willing buyer would pay an interested seller for a particular home. If the home were reconstructed, the dollar amount necessary to do so would be the replacement cost.
Myth: Certain methods, like the price per square foot of the property, are the ways appraisers use to determine the value of a house.
Fact: Appraisers complete a detailed analysis of all factors pertaining to the worth of a property, including its location, condition, size, proximity to facilities and recent values of comparable houses.
Myth: When the economy is strong and the sales prices of properties are reported to be increasing by a certain percentage, the other properties in the area can be expected to appreciate based on that same percentage.
Fact: Value appreciation of a certain house is always determined on an individualized basis, factoring in information on comparable houses and other relevant considerations. This is true in excellent economic times as well as poor.
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Myth: Just looking at what the home looks like on the outside gives a good idea of its worth.
Fact: To conclude an accurate value beyond all doubt, an appraiser must assess the house on a variety of factors based on area, condition, improvements, amenities, and market trends. An exterior inspection obviously can't provide all of the data necessary.
Myth: Since you're the one coughing up the cash for the appraisal when applying for the loan to purchase or refinance real estate, you own the provided appraisal report.
Fact: Legally, the document is owned by the lending company unless the lender relinquishes their interest in the document. By the Equal Credit Opportunity Act, any consumer demanding a copy of the appraisal report must be given one by their lending agency.
Myth: Consumers need not care about what is in their report so long as it meets the necessities of their lending company.
Fact: It is very important for home buyers to look at a copy of their report so that they can verify 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 makes a valuable record for future reference, comprised of useful and often-revealing 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 proximity.
Myth: There is no reason to order an appraisal unless you are trying to get an assessment of the cost of a house during a sales transaction involving a lender.
Fact: Depending upon their qualifications and designations, appraisers can and will perform a multitude of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A home inspection serves the same purpose as an appraisal.
Fact: Appraisal reports are nothing like a home inspection report. The purpose of the appraiser is to form an opinion of value in the appraisal process and through creating the report. A home inspector determines the condition of the home and its major components and reports these findings.