Common myths about appraising
By law, an appraiser must be state-licensed to offer appraisals for federally-supported sales. The law gives you the right to get a copy of your finished report from your lender after it has been produced. Contact Appraisal Express HI, LLC if you have any concerns about the appraisal procedure.
Myth: Market value must be similar to the assessed value of the property.
Fact: This is not often the case; most states do support the suggestion that the assessed value is the same as market value, but not always. Interior remodeling that the assessor is unaware of and a lack of reassessment on nearby properties are perfect examples of why the price can vary.
Myth: The buyer or the seller sometimes may have an influence in the cost of the house depending upon for whom the appraiser is working.
Fact: There is no real interest on the part of the appraiser in the outcome of the appraisal report, therefore he will complete his work with impartiality and independence, regardless for whom the appraisal is conducted.
Myth: Market value should equate to replacement cost.
Fact: The way market value is arrived at is based on what a home buyer would likely pay a willing seller for a home without being under duress from any external group to buy or sell. If the house were reconstructed, the dollar amount required to do so would form the replacement cost.
Myth: Appraisers use a formula, such as a specific price per square foot, to arrive at the cost of a home.
Fact: There are many different ways that an appraiser will use to make a comprehensive analysis of every factor pertaining to the property, such as the size, location, condition, how close it is to certain facilities and the value of recently sold comparable properties.
Myth: When the economy is doing well and the sales prices of properties are found to be appreciating by a certain percentage, the other properties in the neighborhood can be expected to increase based on that same percentage.
Fact: Any value at which an appraiser arrives concerning a certain property is always individualized, based on certain factors derived from the information of comparable homes and other specifications within the home itself. It makes no difference whether the economy is good or on the decline.
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Myth: The home's exterior is determinate of the actual worth of the home; it is unnecessary to do an interior inspection.
Fact: To determine an accurate value beyond all doubt, an appraiser must inspect the house on a variety of factors based on area, condition, improvements, amenities, and market trends. As you can see, none of these factors can be derived simply by viewing the house from the exterior.
Myth: Since you're the one providing the money for the appraisal report when applying for the loan to purchase or refinance real estate, you own the ordered appraisal report.
Fact: The appraisal is, in fact, legally owned by the lending company - unless the lender "relinquishes its interest" in the appraisal report. Home buyers have to be given a copy of the report through request as per the Equal Credit Opportunity Act.
Myth: It doesn't matter to consumers what's in the appraisal report so long as it satisfies the necessities of their lender.
Fact: A home buyer should definitely read through their document; there might be some questions or some concerns 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. An appraisal can double as a record for the future, containing an incredible amount of information - 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 area.
Myth: The only reason someone would hire an appraiser is if a home needs its worth assessed in a lender-based sales transaction.
Fact: Depending upon their qualifications and designations, appraisers can and often do provide a lot of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal report is the same as a home inspection report.
Fact: An appraisal does not serve the same purpose as an inspection report. The function of an appraisal report is to find an opinion of fair market value during the appraisal process and the production of the report. House inspectors will write a report that will express the condition of the property and its major components and possible damage.