Appraisal myths & facts
Legally, an appraiser has to be state certified to perform substantiated real estate appraisals for federally-backed transactions. You are also entitled by law to acquire a copy of the finished report from your lending agency. Contact Piscitelli Appraisal Service if you have any questions about the appraisal process.
Myth: Assessed value generally will be equal to market value.
Fact: While most states support the concept that assessed value is the same as estimated market value, this commonly is not the case. Examples include when interior remodeling has happened and the assessor has not seen the improvements, or when homes in the vicinity have not been reassessed for an prolonged time.
Myth: Depending on whether the appraisal is written for the buyer or the seller, the appraised value of the home will vary.
Fact: There is no vested interest on the part of the appraiser in the result of the report, therefore he will complete his work with impartiality and independence, despite for whom the appraisal is created.
Myth: Any time market value is found, it should equate to the replacement cost of the home.
Fact: Without any pressure from any different parties to buy or sell, market value is what a willing buyer would pay a willing seller for a particular house. Replacement value is the dollar amount needed to reconstruct a house in-kind.
Myth: Appraisers use a calculation, like a certain price per square foot, to conclude the worth of a house.
Fact: Appraisers complete a full analysis of all factors in consideration to the cost of a house, including its location, condition, size, proximity to facilities and recent values of comparable properties.
Myth: When the economy is strong and the sales prices of houses are reported to be increasing by a certain percentage, the other properties in the area can be expected to increase based on that same percentage.
Fact: All appreciation of worth is on a case-by-case basis, found by information on relevant conditions and the data of comparable properties. It doesn't matter if the economy is on the rise or declining.
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Myth: You can generally find what a home is worth simply by looking at the exterior.
Fact: Property value is concluded by a multitude of factors, including location, condition, improvements, amenities, and market trends. An external inspection definitely can't provide all of the data required.
Myth: Since the consumer is the person who provides the capital to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal belongs to them.
Fact: Legally, the appraisal report is owned by the lending agency unless the lender relinquishes their interest in the report. However, home buyers have to be provided with a copy of the report upon written request, due to the Equal Credit Opportunity Act.
Myth: Consumers need not care about what is in their document so long as it meets the requirements of their lending group.
Fact: Only if home buyers read a copy of their 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. There is a wealth of data contained in an appraisal report that can be useful to the home buyer in the future, such as 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: Appraisers are hired only to assess home values in home sales involving mortgage-lending transactions.
Fact: Appraisers can have many varied qualifications and designations which allow them to perform a series of different services including - but not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: An appraisal is the same as a home inspection report.
Fact: A home inspection serves a completely different purpose than an appraisal. The purpose of an appraisal is to form an opinion of fair market value during the appraisal process and the completion of the appraisal. House inspectors will compose a report that will determine the condition of the home and its major components and possible damage.