Appraisal myths debunked
By law, an appraiser is required to be state-licensed to produce appraisals for federally-related sales. You also have the right to receive a copy of the finished report from your lending agency. Contact our professional staff if you have any concerns about the appraisal process.
Myth: The value that is assessed by the appraiser should be the same as the market value.
Fact: This is not often the case; most states do support the suggestion that the assessed value is the same as market value, but not always. Usually when interior remodeling has occurred and the assessor is unaware of the improvement or other houses in the neighborhood have not been reassessed for a good length of time, it may vary wildly.
Myth: The buyer or the seller can have leverage in the cost 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 outcome of the report, therefore he will complete his work with impartiality and independence, no matter for whom the appraisal is conducted.
Myth: Market value will be the same as replacement cost.
Fact: Market value is found by what a willing buyer would be interested in paying a willing seller for a specific house, with neither being under duress to buy or sell. If the home were rebuilt, the dollar amount needed to do so would form the replacement cost.
Myth: Specific methods, such as the price per square foot, are what appraisers use to come to the worth of a house.
Fact: Appraisers complete an exhaustive analysis of all factors pertaining to the price of a property, including its location, condition, size, proximity to facilities and recent sale prices of comparable properties.
Myth: As homes appreciate by a specific percentage - in a strong economy - the houses nearby are figured to appreciate by the same amount.
Fact: Price appreciation of a specific house has to be concluded on an individualized basis, factoring in data on comparable properties and other relevant elements. This is true in fair economic times as well as poor.
Have other questions about appraisers, appraising or real estate in King County or Seattle, WA?Contact Crest Appraisal Services
Myth: Just seeing what the property looks like on its exterior gives a good idea of its value.
Fact: To conclude an accurate price beyond all doubt, an appraiser must assess the house on a variety of factors based on location, condition, improvements, amenities, and current market trends. There's no possible way to get all of this information from simply looking at the property from the outside.
Myth: Because consumers fund the appraisal when applying for loans to purchase or refinance their home, they legally own their appraisal report.
Fact: Legally, the appraisal is owned by the lending agency unless the lender relinquishes their interest in the report. However, home buyers have to be supplied with a copy of the appraisal report upon written request, under the Equal Credit Opportunity Act.
Myth: There's no reason for home buyers to even care about what the appraisal contains so long as their lending company is satisfied.
Fact: A home buyer should definitely look through their report; there could be some questions or some worries about the accuracy of the appraisal report that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can serve as a record for the future, as 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: The only reason someone would order an appraisal is if a home needs its price assessed in a lender-based sales transaction.
Fact: Based upon their qualifications and designations, appraisers can and will provide 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 are definitely not the same as a home inspection report. The reason behind an appraisal is to conclude upon an opinion of fair market value during the appraisal process and the completion of the appraisal report. The job of a home inspector is to find the condition of the home and its major components, then write a report on these inspection.