Myth: Market value must be the same as the assessed value of the property.
Reality: While most states support the suggestion that assessed value is the same as estimated market value, this often is not the case.
Usually when interior remodeling has been done and the assessor is unaware of the improvement or other homes in the area have not been reassessed for quite a while, it may vary widely.
Myth: The buyer or the seller will have some pull in the cost of the property depending upon for whom the appraiser is working.
Reality: There is no vested interest on the part of the appraiser in the result of the analysis, therefore he will conduct his work with impartiality and independence, despite of for whom the appraisal is conducted.
Myth: The replacement cost of the house will be on par with the market value.
Reality: Without any influence from any external parties to buy or sell, market value is what a willing buyer would pay a willing seller for a specific house.
If the home were reconstructed, the dollar amount necessary to do so would be the replacement cost.
Myth: There are certain methods that real estate appraisers use to show the cost of a house, such as the price per square foot.
Reality: There are many numerous ways that an appraiser will use to make a detailed investigation of every factor pertaining to the house, such as the size, location, condition, how close it is to undesirable facilities and the values of recently sold comparable houses.
Myth: When the economy is robust and the sales prices of houses 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: Any value an appraiser derives concerning a specific home is always individualized, based on certain factors concluded from the data of comparable houses and other considerations within the house itself.
It doesn't matter if the economy is doing well or declining.
Myth: You can usually tell what a home is worth simply by looking at the outside.
Reality: To conclude a conclusive value beyond all doubt, an appraiser must assess the property on a variety of factors based on area, condition, improvements, amenities, and current market trends.
There's no possible way to get all of this data from just viewing the home from the outside.
Myth: Because consumers pay for the appraisal when applying for loans to buy or refinance real estate, they legally own their appraisal report.
Reality: Unless a lending agency releases its interest in the report, it is legally owned by the lending company that ordered the appraisal.
However, consumers have to be supplied with a copy of the appraisal report upon written request, due to the Equal Credit Opportunity Act.
Myth: Home buyers need not be concerned with what is in their report so long as it meets the necessities of their lending agency.
Reality: Only when consumers look through a copy of their appraisal report can they double-check 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 an incredible amount of data contained in an appraisal 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 vicinity.
Myth: There is no reason to hire an appraiser unless you are trying to get an estimate of the value of a property during a sales transaction involving a lending institution.
Reality: Appraisers can have many different qualifications and designations which allow them to provide a lot of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: You don't have to get an appraisal if you order a home inspection.
Reality: A home inspection report has a completely different purpose than an appraisal.
The function of an appraisal report is to arrive at an opinion of market value during the appraisal process and the production of the appraisal report.
A home inspector analyzes the condition of the home and its main components and reports these findings.
