Myth: Market value will always be similar to the assessed value of the property.
Reality: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always.
Interior reconstruction that the assessor is not aware of and a lack of reassessment on nearby homes are exact 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.
Reality: The opinion of value of the property does not affect the payment of the appraiser; as such, the appraiser has no pressured interest in the price of the property. This means that he will render business with impartiality and objectivity regardless of for whom the appraisal is created.
Myth: Any time market value is established, it should equal the replacement cost of the property.
Reality: Market value is found by what a willing buyer would likely pay a willing seller for a specific property, with neither being under duress to buy or sell.
The dollar amount needed to rebuild a property is what constitutes the replacement cost.
Myth: Certain formulae, such as the price per square foot, are what appraisers use to arrive at the value of a house.
Reality: There are many numerous ways that an appraiser will use to make a detailed analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to specific facilities and the sales prices of recently sold comparable houses.
Myth: When the economy is robust and the sales prices of properties are reported to be appreciating by a certain percentage, the other homes in the neighborhood can be expected to increase based on that same percentage.
Reality: All appreciation of value is on a one-on-one basis, determined by information on relevant conditions and the data of comparable properties.
It makes no difference if the economy is strong or poor.
Myth: The house's exterior is determinate of the actual value of the property; there is no need to do an interior inspection.
Reality: To find a solid value beyond all doubt, an appraiser must examine the home on a variety of factors based on area, condition, improvements, amenities, and current market trends.
An exterior inspection definitely can't provide all of the information needed.
Myth: Because the consumer is the one who provides the money to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal belongs to them.
Reality: The document is, in fact, legally owned by the lender - unless the lender "releases its interest" in the appraisal.
Due the Equal Credit Opportunity Act, any home buyer demanding a copy of the document must be provided with one by their lending company.
Myth: There's no need for consumers to even care about what the report contains so long as their lending agency is fine with the contents therein.
Reality: A consumer should definitely inspect their report; there might be some questions or some worries with the accuracy of the appraisal that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make.
Also, the report makes a valuable record for future reference, comprised of useful and often-revealing data - including, but 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 vicinity.
Myth: The only reason someone would hire an appraiser is if a house needs its value assessed in a lender sales transaction.
Reality: Based upon their qualifications and designations, appraisers can and often do perform a lot of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal is no different than a home inspection report.
Reality: Appraisal reports are definitely not the same as a home inspection.
An appraiser forms an opinion of value in the appraisal process and resulting appraisal.
A home inspector analyzes the condition of the house and its major components and reports these findings.
