Appraisal myths & facts
It is enforced by law that a real estate appraiser needs to be state-licensed to create appraisals for federally-supported property sales in Hawaii. Also by law, you have the right to demand a copy of the completed appraisal from your lending agency. Contact us if you have any questions about the appraisal procedure.
Myth: Market value must be equivocal to the assessed value of the property.
Fact: This is not often the case; most states do support the concept that the assessed value is the same as market value, but not always. Examples include when interior reconstruction has happened and the assessor is unaware of the improvements, or when houses in the area have not been reassessed for an extended period.
Myth: Depending on if the appraisal is drawn up for the buyer or the seller, the opinion of value of the home will vary.
Fact: There is no personal interest on the part of the appraiser in the outcome of the appraisal report, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is ordered.
Myth: The replacement value of the property is always is on par with the market value.
Fact: The way market value is derived is based on what a buyer would likely pay a willing seller for a property without being under duress from any outside group to purchase or sell. The dollar amount needed to reconstruct a home is what shows the replacement cost.
Myth: Certain methods, like the price per square foot of the property, are the methods appraisers use to determine the value of a property.
Fact: Appraisers complete an exhaustive analysis of all factors pertaining to the cost of a property, including its location, condition, size, proximity to facilities and recent opinion of value of comparable properties.
Myth: As houses appreciate by a specific percentage - in a strong economy - the homes nearby are figured to increase by the same amount.
Fact: Cost increase of a certain house must be determined on a case-by-case basis, factoring in information on comparable properties and other relevant considerations. It makes no difference if the economy is powerful or poor.
Have other questions about appraisers, appraising or real estate in Maui County or Kihei, Hawaii?Contact us
Myth: The home's exterior is determinate of the actual value of the property; it is unnecessary to do an interior inspection.
Fact: There are a multitude of different factors that determine property value; these factors include area, condition, improvements, amenities, and market trends. An external inspection definitely can't provide all of the data needed.
Myth: Since the consumer is the party who provides the money to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal report is theirs.
Fact: Legally, the appraisal report is owned by the lender unless the lender relinquishes their interest in the appraisal. However, home buyers have to be provided with a copy of the appraisal upon written request, due to the Equal Credit Opportunity Act.
Myth: There's no need for consumers to even concern themselves with what the report contains so long as their lending institution is satisfied.
Fact: It is a very good idea for home buyers to look at a copy of their appraisal report so that they can verify the accuracy of the report, in case it's required to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can double as a record for the future, as it contains an exorbitant 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 proximity.
Myth: There is no reason to order an appraisal unless you are trying to get an assessment of the cost of a house during a sales transaction involving a lending company.
Fact: Based upon their qualifications and designations, appraisers can and will perform a series 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 report does not fulfill the same purpose as an inspection report. The job of the appraiser is to form an opinion of value in the appraisal process and through writing the report. House inspectors will create a report that will explain the condition of the house and its major components and possible damage.