Myth: Assessed value should be equal to market value.
Reality: 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 remodeling has happened and the assessor is unaware of the improvements, or when houses in the area have not been reassessed for an extended time.
Myth: The buyer or the seller often will have leverage in the cost of the property depending upon for whom the appraiser is working.
Reality: The appraiser has no vested interest in the result of the report and should render services with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Market value will mirror replacement cost.
Reality: Market value is arrived at through what a willing buyer would be interested in paying a willing seller for a particular house, with neither being under undue influence to buy or sell.
Replacement value is the dollar amount needed to rebuild a house in-kind.
Myth: Certain formulae, such as the price per square foot, are the methods appraisers use to arrive at the value of a property.
Reality: There are many numerous formulae that an appraiser will use to make a comprehensive analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to undesirable facilities and the sales prices of recently sold comparable homes.
Myth: As homes increase in value by a certain percentage - in a robust economy - the houses in proximity are figured to appreciate by the same amount.
Reality: Any value an appraiser derives in regards to a particular property is always individualized, based on certain factors found from the information of comparable houses and other specifications within the home itself.
It doesn't matter if the economy is doing well or declining.
Myth: Just looking at what the property looks like on its exterior gives an idea of its value.
Reality: There are a multitude of different variables that show the value of a home; these factors include area, condition, improvements, amenities, and market trends.
Obviously, none of these things can be found simply by looking at the house from the outside.
Myth: Since you're the one funding for the appraisal when applying for your loan to purchase or refinance your house, you own the produced appraisal report.
Reality: Unless a lending agency releases its vestment in the appraisal report, it is legally owned by the lending company that purchased the appraisal.
Under the Equal Credit Opportunity Act, any consumer demanding a copy of the document must be provided with one by their lending agency.
Myth: There's no need for home buyers to even concern themselves with what the report contains so long as their lender is satisfied.
Reality: A consumer should definitely read through their document; there will probably be some questions or some concerns about the accuracy of the appraisal that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make.
Also, the report makes an excellent record for future reference, containing useful and often-revealing data - 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 vicinity.
Myth: The only reason someone would order an appraisal is if a home needs its value assessed in a lender sales transaction.
Reality: Based upon their qualifications and designations, appraisers can and often do provide a multitude of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal is no different than a home inspection.
Reality: An appraisal report does not serve the same purpose as an inspection.
The appraiser forms an opinion of value in the appraisal process and resulting appraisal.
A home inspector analyzes the condition of the house and its main components and reports these findings.