Appraisal myths & facts
It is mandated by law that a real estate appraiser is required to be state-licensed to offer appraisal reports for federally-supported home purchases in California. The law gives you the right to receive a copy of your completed report from your lending agency after it has been provided. Contact us if you have any questions about the appraisal process.
Myth: Market value must be the same as 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. Examples include when interior reconstruction has occurred and the assessor is unaware of the improvements, or when homes in the area have not been reassessed for an extended time.
Myth: The value of a home will be different depending upon if the appraisal is conducted for the buyer or the seller.
Fact: The appraiser has no vested interest in the result of the appraisal and should complete his job with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Any time market value is established, it should be similar to the replacement cost of the property.
Fact: Market value is based on what a willing buyer would likely pay a willing seller for a certain property, with neither being under duress to buy or sell. If the property were reconstructed, the dollar amount needed to do so would be the replacement cost.
Myth: Certain formulae, such as the price per square foot of the property, are the methods appraisers use to arrive at the value of a home.
Fact: There are many varied calculations that an appraiser will use to make a full investigation of every factor in consideration of the property, such as the size, location, condition, how close it is to undesirable facilities and the value of recently sold comparable houses.
Myth: As houses increase their worth by a specific percentage - in a robust economy - the homes nearby are expected to appreciate by the same amount.
Fact: All increase of worth is on an individual basis, determined by data on relevant considerations and the data of comparable homes. It doesn't matter if the economy is on the rise or declining.
Have other questions about appraisers, appraising or real estate in Ventura County or Oak Park, CA?Contact us
Myth: The home's exterior is determinate of the actual value of the property; there is no need to do an interior inspection.
Fact: To find an accurate price beyond all doubt, an appraiser must examine the house on a variety of factors based on location, condition, improvements, amenities, and current market trends. Obviously, none of these factors can be derived just by viewing the home from the exterior.
Myth: Since you're the one coughing up the cash for the appraisal when applying for your loan to buy or refinance your home, you own the provided appraisal report.
Fact: The document is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the report. Due the Equal Credit Opportunity Act, any consumer requesting a copy of the document must be provided with one by their lending company.
Myth: There's no need for consumers to even concern themselves with what the report contains so long as their lending agency is satisfied.
Fact: A home buyer should definitely read through their report; there will probably be some questions or some concerns about the accuracy of the appraisal report that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes an invaluable record for future reference, filled with useful and often-revealing information - including 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: There is no reason to hire an appraiser unless you are trying to get an assessment of the worth of a home during a sales transaction involving a lending company.
Fact: Based upon their qualifications and designations, appraisers can and may perform a series of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A home inspection serves the same purpose as an appraisal.
Fact: An appraisal does not fulfill the same purpose as an inspection. The appraiser concludes on an opinion of value in the appraisal process and resulting appraisal report. House inspectors will compose a report that will explain the condition of the home and its major components and possible damage.