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Appraisal myths & facts

Legally, a real estate appraiser must be state certified to perform substantiated appraisal reports for federally-related transactions. You also have the right to acquire a copy of the finished report from your lender. Contact Crest Appraisal Services if you have any questions about the appraisal process.

Myth: The value that is assessed by the appraiser should be exactly the same as the market value.

Fact: This is not often the case; most states do support the concept that the assessed value is the same as market value, but not always. Examples include when interior reconstruction has occurred and the assessor is unaware of the improvements, or when homes in the vicinity have not been reassessed for an prolonged time.

Myth: The opinion of value of a property will be different depending upon if the appraisal is ordered for the buyer or the seller.

Fact: There is no personal interest on the part of the appraiser in the result of the analysis, therefore he will complete his work with impartiality and independence, regardless for whom the appraisal is ordered.

Myth: Market value should approximate replacement cost.

Fact: Market value is based on what a willing buyer would likely pay a willing seller for a certain home, with neither being under pressure to buy or sell. If the house were rebuilt, the dollar amount necessary to do so would form the replacement cost.

Myth: Appraisers use a calculation, such as a certain price per square foot, to come to the value of a house.

Fact: There are many differing calculations that an appraiser will use to make a comprehensive investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to specific facilities and the cost of recently sold comparable properties.

Myth: In a strong economy - when the costs of properties in a given region are found to be appreciating by a particular percentage - the costs of individual homes in the vicinity can be expected to rise by that same percentage.

Fact: All increase of worth is on an individual basis, found by information on relevant conditions and the data of comparable houses. This is true in fair economic times as well as bad.

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Myth: Just looking at what the home looks like on its exterior gives an excellent idea of its worth.

Fact: There are a number of different factors that determine property value; these factors include area, condition, improvements, amenities, and market trends. There's no real way to get all of this information from just looking at the property from the exterior.

Myth: Because consumers pay for the appraisal when applying for loans to buy or refinance their home, they legally own their appraisal report.

Fact: Unless a lender releases its interest in the appraisal report, it is legally owned by the lending company that purchased the appraisal. However, home buyers have to be supplied with a copy of the appraisal report upon written request, due to the Equal Credit Opportunity Act.

Myth: There's no reason for home buyers to even worry about what the appraisal report contains so long as their lending institution is fine with the contents therein.

Fact: It is very important for consumers to go through a copy of their appraisal report so that they can verify the accuracy of the report, in case they need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of data stored in an appraisal report that can 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 area.

Myth: The only reason someone would order an appraisal is if a property needs its worth assessed in a lender sales transaction.

Fact: Based upon their qualifications and designations, appraisers can and often do perform a variety of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.

Myth: An appraisal report is the same as a home inspection report.

Fact: An appraisal report does not fulfill the same purpose as an inspection. The purpose of an appraisal is to form an opinion of fair market value during the appraisal process and the completion of the appraisal. The job of a home inspector is to find the condition of the house and its major components, then create a report on these findings.