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Common myths about appraising

Legally, a real estate appraiser has to be state certified to produce substantiated appraisal reports for federally-backed transactions. You are also entitled by law to acquire a copy of the finished report from your lender. Contact our professional staff if you have any questions about the appraisal process.

Myth: Assessed value should always be the same as to market value.

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. Sometimes when interior remodeling has occurred and the assessor is unaware of the improvement or other houses in the area 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 opinion of value of the house will vary.

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

Myth: Market value should approximate replacement cost.

Fact: Market value is found by what a willing buyer would likely pay a willing seller for a specific home, with neither being under undue influence to buy or sell. The replacement cost is the dollar amount needed to reconstruct a home in-kind.

Myth: Specific formulae, like the price per square foot, are the methods appraisers use to determine the worth of a home.

Fact: There are many numerous calculations that an appraiser will use to make an in-depth investigation of every factor pertaining to the property, such as the size, location, condition, how close it is to certain facilities and the sales price of recently sold comparable homes.

Myth: When the economy is strong and the worth of homes are reported to be appreciating by a certain percentage, the other homes in the vicinity can be expected to appreciate based on that same percentage.

Fact: Worth appreciation of a specific home must be determined on an individualized basis, factoring in information on comparable houses and other relevant considerations. It makes no difference if the economy is powerful or on the decline.

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Myth: The home's outside is determinate of the actual price of the property; there is no need to do an interior appraisal.

Fact: There are a number of different factors that conclude the value of a home; these factors include location, condition, improvements, amenities, and market trends. There's no real way to get all of this information from just viewing the house from the outside.

Myth: Considering that the consumer is the one who puts up the funding to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal report is theirs.

Fact: The document is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the appraisal report. Home buyers have to be supplied with a version of the document through request due to the Equal Credit Opportunity Act.

Myth: Consumers need not care about what is in their appraisal so long as it meets the needs of their lending group.

Fact: Only if consumers examine a copy of their appraisal 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. Also, the appraisal report makes a near perfect record for future reference, filled with helpful 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 proximity.

Myth: The only reason someone would hire an appraiser is if a home needs its price estimated in a lender-based sales transaction.

Fact: Based upon their qualifications and designations, appraisers can and do provide a multitude of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.

Myth: A house inspection serves the same purpose as an appraisal.

Fact: Appraisal reports have almost nothing in common with a home inspection report. The purpose of the appraiser is to find an opinion of value in the appraisal process and through creating the report. A home inspector assesses the condition of the property and its major components and reports these findings.