Common myths about appraising

By law, an appraiser is required to be state-licensed to perform appraisals for federally-backed purchases. The law gives you the right to receive a copy of your completed appraisal from your lender after it has been provided. Contact Tight & Right Real Estate Valuation if you have any questions about the appraisal procedure.

Myth: The value that is ascertained by the appraiser should be exactly the same as the market value.

Fact: While most states back the suggestion that assessed value approximates estimated market value, this usually is not the case. Often when interior remodeling has occurred and the assessor is not aware of the improvement or other houses in the neighborhood have not been reassessed for quite some time, it may vary wildly.

Myth: Depending on if the appraisal is drawn up for the buyer or the seller, the value of the property will vary.

Fact: There is no real interest on the part of the appraiser in the result of the report, therefore he will conduct his work with impartiality and independence, despite for whom the appraisal is created.

Myth: The replacement cost of the home is always is on par with the market value.

Fact: Market value is acquired by what a willing buyer would likely pay a willing seller for a specific house, with neither being under duress to buy or sell. Replacement cost is the dollar amount needed to rebuild a home in-kind.

Myth: There are specific ways that real estate appraisers use to determine the value of a home, such as the price per square foot.

Fact: Appraisers complete an exhaustive analysis of all factors pertaining to the price of a home, including its location, condition, size, proximity to facilities and recent opinion of value of comparable houses.

Myth: In a powerful economy - when the values of houses in a given area are found to be rising by a particular percentage - the worth of individual homes in the vicinity can be expected to rise by that same percentage.

Fact: Cost increase of a certain property must be concluded on an individualized basis, factoring in data on comparable properties and other relevant specifications within the home itself. It doesn't matter if the economy is doing well or declining.

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Myth: Just examining what the property looks like on the outside gives an idea of its worth.

Fact: To conclude an accurate value beyond all doubt, an appraiser must inspect the property on a variety of factors based on location, condition, improvements, amenities, and current market trends. An external inspection certainly can't provide all of the data required.

Myth: Since you're the one coughing up the cash for the appraisal report when applying for the loan to purchase or refinance real estate, you own the provided appraisal.

Fact: Unless a lending agency releases its vestment in the report, it is legally owned by the lending company that ordered the appraisal. However, consumers must be supplied with a copy of the appraisal upon written request, because of the Equal Credit Opportunity Act.

Myth: There's no reason for consumers to even worry about what the report contains so long as their lender is fine with the contents therein.

Fact: It is almost imperative for home buyers to read a copy of their appraisal so that they can double-check the accuracy of the document, in case it's required to question its accuracy. 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, containing a great deal of 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 proximity.

Myth: Appraisers are hired only to assess real estate property values in property sales involving mortgage-lending transactions.

Fact: Ordering an appraisal can fulfill a variety of requirements depending on the designations and certifications of the appraiser involved; appraisers can perform a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.

Myth: There's no need to get an appraisal if you order a home inspection.

Fact: An appraisal report does not fulfill the same purpose as an inspection report. The reason behind an appraisal report is to form an opinion of fair market value during the appraisal process and the completion of the report. House inspectors will create a report that will express the condition of the home and its major components and possible damage.

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