Common myths about appraising
By law, an appraiser is enforced to be state-licensed to perform appraisals for federally-related transactions. The law gives you the right to acquire a copy of your finished appraisal report from your lending agency after it has been produced. Contact our professional staff if you have any concerns about the appraisal procedure.
Myth: Market value has to be similar to the assessed value of the property.
Fact: While most states support the concept that assessed value approximates estimated market value, this usually is not the case. Sometimes when interior remodeling has occurred and the assessor is unaware of the improvement or other houses in the neighborhood have not been reassessed for years or more, it may vary wildly.
Myth: The appraised value of a property will be different depending upon if the appraisal is produced for the buyer or the seller.
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, despite for whom the appraisal is created.
Myth: Market value should approximate replacement cost.
Fact: Without any pressure from any outside parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific property. The dollar amount required to reconstruct a home is what constitutes the replacement cost.
Myth: There are specific ways that appraisers use to show the opinion of value of a property, like the price per square foot.
Fact: There are many differing processes 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 opinion of value of recently sold comparable houses.
Myth: When the economy is strong and the sales prices of homes are found to be increasing by a certain percentage, the other houses in the area can be expected to appreciate based on that same percentage.
Fact: Price increase of a specific house must be determined on a case-by-case basis, factoring in information on comparable homes and other relevant elements. It makes no difference whether the economy is robust or poor.
Have other questions about appraisers, appraising or real estate in Maui County or Kihei, Hawaii?Contact Appraisal Express HI, LLC
Myth: Just seeing what the home looks like on the outside gives an excellent idea of its value.
Fact: House value is determined by a multitude of variables, including location, condition, improvements, amenities, and market trends. An outside-only inspection definitely can't provide all of the data necessary.
Myth: Because consumers pay for the appraisal when applying for loans to buy or refinance their house, they legally own their appraisal.
Fact: The document is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the appraisal. By the Equal Credit Opportunity Act, any consumer asking for a copy of the report must be given one by their lending agency.
Myth: Consumers need not be concerned with what is in their report so long as it satisfies the requirements of their lending agency.
Fact: Only if home buyers read a copy of their appraisal report can they verify its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can serve as a record for the future, since it contains an exorbitant amount of information - including, but certainly 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: The only reason someone would hire an appraiser is if a house needs its price estimated in a lender sales transaction.
Fact: Hiring an appraiser can fulfill a variety of requirements depending on the designations and certifications of the appraiser involved; appraisers can provide a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: A property inspection serves the same purpose as an appraisal.
Fact: Appraisal reports are completely different than a home inspection report. The appraiser forms an opinion of value in the appraisal process and resulting appraisal. The point of a home inspector is to approximate the condition of the home and its main components, then write a report on these conclusions.