Myth: Assessed value generally will be equal to market value.
Reality: While most states uphold the idea that assessed value is the same as estimated market value, this commonly is not the case.
Examples include when interior reconstruction has happened and the assessor does not know about the improvements, or when houses in the area have not been reassessed for an extended time.
Myth: Depending on if the appraisal is provided for the buyer or the seller, the value of the house will vary.
Reality: The appraiser has no vested interest in the result of the report and should conduct his task with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Market value should be the same as replacement cost.
Reality: Market value is acquired by what a willing buyer would be interested in paying a willing seller for a certain house, with neither being under duress to buy or sell.
Replacement value is the dollar amount needed to rebuild a home in-kind.
Myth: There are specific methods that real estate appraisers use to show the value of a house, such as the price per square foot.
Reality: Appraisers complete a full analysis of all factors in consideration to the value of a home, including its location, condition, size, proximity to facilities and recent values of comparable properties.
Myth: In a robust economy - when the values of homes in a given neighborhood are reported to be rising by a particular percentage - the prices of individual properties in the area can be expected to rise by that same percentage.
Reality: An increase in value of a certain home has to be determined on a case-by-case basis, factoring in information on comparable houses and other relevant specifications within the property itself.
It makes no difference whether the economy is strong or poor.
Myth: Just examining what the property looks like on its exterior gives an excellent idea of its value.
Reality: House value is determined by a multitude of variables, including - but not limited to - location, condition, improvements, amenities, and market trends.
An exterior inspection obviously can't provide all of the data needed.
Myth: Since you're the one funding for the appraisal report when applying for your loan to purchase or refinance real estate, you own the ordered appraisal report.
Reality: Legally, the document is owned by the lender unless the lender relinquishes their interest in the report.
Consumers must be provided with a version of the document upon written request because of the Equal Credit Opportunity Act.
Myth: Home buyers need not be concerned with what is in their appraisal document so long as it meets the needs of their lending agency.
Reality: A home buyer should definitely look through their document; there will probably be some questions or some concerns with the accuracy of the analysis that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make.
An appraisal can serve as a record for the future, containing an incredible amount of data - 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 property needs its value estimated in a lender-based sales transaction.
Reality: Hiring an appraiser can fulfill a variety of needs 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: You don't have to get an appraisal if you order a home inspection.
Reality: An appraisal does not fulfill the same purpose as an inspection.
The reason behind an appraisal report is to conclude upon an opinion of market value during the appraisal process and the production of the appraisal.
House inspectors will create a report that will express the condition of the property and its major components and possible damage.