Appraisal myths & facts
Legally, an appraiser must be state certified to perform substantiated real estate appraisals for federally-backed transactions. You have the ability to acquire a copy of the finished appraisal from your lender. Contact Bain & Associates, Inc. if you have any concerns about the appraisal process.
Myth: The value that is ascertained by the appraiser should be equivalent to the market value.
Fact: This usually isn't true; most states do support the suggestion 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 properties in the vicinity have not been reassessed for an prolonged period.
Myth: Depending on if the appraisal is drawn up for the buyer or the seller, the cost of the home will vary.
Fact: The appraiser has no vested interest in the outcome of the report and should render services with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: Market value should be the same as replacement cost.
Fact: Market value is found by what a willing buyer would likely pay a willing seller for a particular home, with neither being under pressure to buy or sell. Replacement value is the dollar amount needed to reconstruct a home in-kind.
Myth: There are specific ways that appraisers use to determine the opinion of value of a house, like the price per square foot.
Fact: There are many differing formulae that an appraiser will use to make an in-depth investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to specific facilities and the value of recently sold comparable houses.
Myth: As properties increase their worth by a specific percentage - in a robust economy - the properties around the appreciating properties are expected to increase by the same amount.
Fact: Any worth at which an appraiser arrives in regards to a certain house is always personalized, based on certain factors derived from the data of comparable properties and other considerations within the property itself. This is true in good economic times as well as poor.
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Myth: Just examining what the house looks like on the outside gives an idea of its value.
Fact: To determine an accurate price beyond all doubt, an appraiser must assess the home on a variety of factors based on area, condition, improvements, amenities, and market trends. As you can see, none of these variables can be derived just by viewing the house from the exterior.
Myth: Because consumers fund the appraisal when applying for loans to buy or refinance their house, they legally own their appraisal.
Fact: Unless a lending agency releases its vestment in the appraisal report, it is legally owned by the lending agency that purchased the appraisal. Consumers have to be provided with a version of the report through request because of the Equal Credit Opportunity Act.
Myth: Consumers need not be concerned with what is in their appraisal document so long as it exceeds the requirements of their lending agency.
Fact: It is almost imperative for consumers to go through a copy of their appraisal so that they can double-check the accuracy of the report, in case it's required 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 information contained in an report that will probably 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 region.
Myth: The only reason someone would order an appraisal is if a property needs its cost estimated in a lender sales transaction.
Fact: Based upon their qualifications and designations, appraisers can and will perform 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. The appraiser decides upon an opinion of value in the appraisal process and resulting appraisal. The task of a home inspector is to assess the condition of the house and its main components, then create a report on their conclusions.
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