Appraisal myths debunked
Legally, an appraiser is required to be state certified to write substantiated appraisal reports for federally-supported purchase. Also by law, you have the right to demand a copy of the finished appraisal from your lending agency. Contact our professional staff if you have any concerns about the appraisal procedure.
Myth: Market value has to be the same as the assessed value of the property.
Fact: This usually isn't true; most states do support the idea that the assessed value is the same as market value, but not always. Interior remodeling that the assessor is unaware of and a dearth of reassessment on nearby properties are excellent examples of why this occurs.
Myth: The buyer or the seller sometimes may have some pull in the value of the house depending upon for whom the appraiser is working.
Fact: The appraiser has no vested interest in the result of the report and should complete services with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Any time market value is established, it should be similar to the replacement cost of the home.
Fact: The way market value is arrived at is based on what a buyer would be willing to pay a willing seller for a home without being under influence from any external party to purchase or sell. Replacement value is the dollar amount required to reconstruct a home in-kind.
Myth: Certain methods, such as the price per square foot of the property, are the methods appraisers use to arrive at the worth of a home.
Fact: Appraisers complete a detailed analysis of all factors in consideration to the price of a property, including its location, condition, size, proximity to facilities and recent costs of comparable homes.
Myth: As houses increase their worth by a specific percentage - in a robust economic state - the properties within the same neighborhood are expected to appreciate by the same amount.
Fact: Cost appreciation of a specific home must be determined on an individualized basis, factoring in data on comparable homes and other relevant elements. This is true in strong economic times as well as bad.
Have other questions about appraisers, appraising or real estate in King County or Seattle, WA?Contact our professional staff
Myth: You can commonly see what a property is worth simply by looking at the exterior.
Fact: There are a number of different variables that determine property value; these factors include location, condition, improvements, amenities, and market trends. There's no real way to get all of this data from simply inspecting the property from the exterior.
Myth: Because consumers fund the appraisal when applying for loans to purchase or refinance real estate, they legally own their appraisal report.
Fact: Unless a lender releases its interest in the document, it is legally owned by the lending company that purchased the appraisal. However, consumers must be given a copy of the document upon written request, due to the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the appraisal so long as it satisfies the needs of their lending agency.
Fact: Only if consumers check out a copy of their appraisal report can they verify its accuracy and possibly need to question the result. 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 area.
Myth: The only reason someone would order an appraisal is if a property needs its price estimated in a lender-based sales transaction.
Fact: Hiring an appraiser can fulfill a variety of needs depending on the designations and certifications of the appraiser involved; appraisers can provide a great deal of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: An appraisal report is the same as a home inspection.
Fact: An appraisal does not serve the same purpose as an inspection report. An appraiser decides upon an opinion of value in the appraisal process and resulting appraisal report. The job of a home inspector is to assess the condition of the property and its main components, then produce a report on these inspection.