Myth: Market value will always be similar to the assessed value of the property.
Reality: While most states support the suggestion that assessed value approximates estimated market value, this usually is not the case.
Interior reconstruction that the assessor is not aware of and a lack of reassessment on nearby homes are perfect examples of why there might be a differential in price.
Myth: The buyer or the seller sometimes may have leverage in the cost of the house depending upon for whom the appraiser is working.
Reality: The appraiser has no personal interest in the outcome of the appraisal and should conduct his task with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: The replacement value of the house is always in line with the market value.
Reality: Market value is arrived at through what a willing buyer would likely pay a willing seller for a particular home, with neither being under duress to buy or sell.
If the house were reconstructed, the dollar amount needed to do so would form the replacement cost.
Myth: There are certain ways that real estate appraisers use to determine the opinion of value of a house, like the price per square foot.
Reality: Appraisers complete a detailed analysis of all factors pertaining to the value of a home, including its location, condition, size, proximity to facilities and recent sale prices of comparable homes.
Myth: In a robust economy - when the values of properties in a given area are found to be rising by a certain percentage - the prices of individual homes in the vicinity can be expected to increase by that same percentage.
Reality: All appreciation of value is on an individual basis, determined by data on relevant elements and the data of comparable properties.
It makes no difference whether the economy is excellent or terrible.
Myth: Just seeing what the property looks like on the outside gives an idea of its value.
Reality: To conclude a conclusive value beyond all doubt, an appraiser must examine the property on a variety of factors based on area, condition, improvements, amenities, and market trends.
As you can see, none of these factors can be found simply by examining the home from the outside.
Myth: Because consumers fund appraisals when applying for loans to buy or refinance their property, they legally own their appraisal.
Reality: The report is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the appraisal.
However, home buyers must be given a copy of the appraisal upon written request, through the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the appraisal report so long as it satisfies the necessities of their lending company.
Reality: It is very important for home buyers to check over a copy of their report so that they can verify the accuracy of the document, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make.
Also, the appraisal report makes a valuable record for future reference, containing helpful and often-revealing data - including 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: There is no reason to hire an appraiser unless you are trying to get an estimate of the value of a home during a sales transaction involving a lender.
Reality: Based upon their qualifications and designations, appraisers can and may perform a lot of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: You don't have to get an appraisal if you get a home inspection.
Reality: An appraisal report does not fulfill the same purpose as an inspection.
The function of an appraisal report is to form an opinion of market value during the appraisal process and the completion of the appraisal.
House inspectors will create a report that will determine the condition of the house and its major components and possible damage.