Myth: Market value will always be the same as the assessed value of the property.
Reality: While most states support the suggestion that assessed value equates estimated market value, this generally is not the case.
Often when interior remodeling has been done and the assessor is not aware of the improvement or other houses in the area have not been reassessed for years or more, it may vary widely.
Myth: The value of a property will vary depending upon if the appraisal is ordered for the buyer or the seller.
Reality: The appraiser has no personal interest in the result of the appraisal report and should render services with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Any time market value is determined, it should match the replacement cost of the property.
Reality: The way market value is arrived at is based on what a buyer would likely pay a willing seller for a home without being under duress from any external party to purchase or sell.
Replacement cost is the dollar amount needed to reconstruct a home in-kind.
Myth: Specific formulae, such as the price per square foot of the property, are what appraisers use to ascertain the value of a home.
Reality: There are many differing formulae that an appraiser will use to make a comprehensive investigation of every factor in consideration of the house, such as the size, location, condition, how close it is to undesirable facilities and the values of recently sold comparable houses.
Myth: When the economy is robust and the sales prices of homes are found to be rising by a certain percentage, the other homes in the neighborhood can be expected to rise based on that same percentage.
Reality: All appreciation of value is on a case-by-case basis, determined by information on relevant conditions and the data of comparable properties.
It doesn't matter if the economy is doing well or declining.
Myth: Just looking at what the house looks like on its exterior gives a good idea of its value.
Reality: To conclude a solid value beyond all doubt, an appraiser must examine the property on a variety of factors based on location, condition, improvements, amenities, and market trends.
As you can see, none of these factors can be found just by inspecting the home from the outside.
Myth: Because consumers fund appraisal reports when applying for loans to buy or refinance real estate, they legally own their appraisal.
Reality: Legally, the appraisal report is owned by the lending agency unless the lender releases their interest in the document.
However, home buyers must be provided with a copy of the appraisal report upon written request, under the Equal Credit Opportunity Act.
Myth: There's no reason for consumers to even worry about what the appraisal report contains so long as their lending institution is satisfied.
Reality: It is almost imperative for home buyers to peruse a copy of their appraisal so that they can verify the accuracy of the report, in case it's required to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make.
There is an incredible amount of information contained in a report that could 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: Appraisals are ordered only to assess house values in property sales involving mortgage-lending deals.
Reality: Appraisers can have many different qualifications and designations which allow them to perform a series of different services including - but definitely not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: A property inspection serves the same purpose as an appraisal.
Reality: A home inspection report serves a completely different purpose than an appraisal report.
The point of an appraisal report is to form an opinion of market value during the appraisal process and the completion of the appraisal.
The purpose of a home inspector is to assess the condition of the home and its main components, then produce a report on their conclusions.
