Myth: Assessed value generally will equate market value.
Reality: While most states back the suggestion that assessed value is the same as estimated market value, this often is not the case.
Examples include when interior remodeling has occurred and the assessor does not know about the improvements, or when properties in the vicinity have not been reassessed for an extended period.
Myth: The buyer or the seller often will have impact in the cost of the home depending upon for whom the appraiser is working.
Reality: The appraiser has no vested interest in the result of the appraisal and should complete his task with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: The replacement cost of the house will be on par with the market value.
Reality: Market value is found by what a willing buyer would be interested in paying a willing seller for a particular house, with neither being under duress to buy or sell.
Replacement cost is the dollar amount needed to reconstruct a house in-kind.
Myth: Specific methods, like the price per square foot, are what appraisers use to arrive at the value of a home.
Reality: Appraisers make a detailed analysis of all factors in consideration to the value of a home, including its location, condition, size, proximity to facilities and recent values of comparable homes.
Myth: As houses appreciate by a certain percentage - in a robust economy - the properties around the appreciating properties are expected to increase by the same amount.
Reality: An increase in value of a specific home has to be determined on a case-by-case basis, factoring in data on comparable houses and other relevant considerations.
This is true in good economic times as well as poor.
Myth: Just seeing what the property looks like on the outside gives an excellent idea of its value.
Reality: To conclude a genuine value 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 things can be derived simply by inspecting the property from the exterior.
Myth: Since you're the one providing the money for the appraisal when applying for the loan to purchase or refinance real estate, you own the provided appraisal report.
Reality: Legally, the appraisal report is owned by the lender unless the lender relinquishes their interest in the appraisal.
Consumers must be provided with a copy of the appraisal report through request as per the Equal Credit Opportunity Act.
Myth: There's no need for home buyers to even concern themselves with what the report contains so long as their lender is satisfied.
Reality: Only when consumers check out a copy of their appraisal report can they verify its accuracy and know if they should ask questions. Remember, this is probably the most expensive and important investment a consumer will ever make.
There is a wealth of information stored in an appraisal that could be useful to the consumer 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 proximity.
Myth: Appraisers are hired only to estimate home values in home sales involving mortgage-lending deals.
Reality: Based upon their qualifications and designations, appraisers can and may provide a lot of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal is the same as a home inspection.
Reality: A home inspection report serves a completely different purpose than an appraisal report.
The purpose of an appraisal is to find an opinion of market value during the appraisal process and the production of the appraisal.
A home inspector analyzes the condition of the home and its main components and reports their findings.
