Myth: The value that is assessed by the appraiser is required to be equivalent to the market value.
Reality: While most states uphold the idea that assessed value is the same as estimated market value, this generally is not the case.
Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby houses are excellent examples of why the price can vary.
Myth: Depending on if the appraisal is produced for the buyer or the seller, the value of the home will vary.
Reality: The appraiser has no vested interest in the result of the appraisal and should conduct his job with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: The replacement value of the property should be on par with the market value.
Reality: Market value is arrived at through what a willing buyer would be interested in paying a willing seller for a specific property, with neither being under pressure to buy or sell.
If the house were rebuilt, the dollar amount required to do so would set the replacement cost.
Myth: Specific formulae, such as the price per square foot of the property, are the methods appraisers use to arrive at the value of a property.
Reality: There are many different processes that an appraiser will use to make a comprehensive investigation of every factor in consideration of the home, such as the size, location, condition, how close it is to specific facilities and the sales prices of recently sold comparable properties.
Myth: When the economy is robust and the sales prices of homes are found to be rising by a certain percentage, the other houses in the proximity can be expected to appreciate based on that same percentage.
Reality: All appreciation of value is on an individual basis, determined by information on relevant conditions and the data of comparable houses.
This is true in strong economic times as well as bad.
Myth: Just examining what the house looks like on the outside gives a good idea of its value.
Reality: Home value is determined by a number of factors, including - but not limited to - location, condition, improvements, amenities, and market trends.
As you can see, none of these factors can be found simply by viewing the house from the exterior.
Myth: Because consumers fund the appraisal when applying for loans to buy or refinance their property, they legally own their appraisal report.
Reality: Unless a lender releases its interest in the appraisal report, it is legally owned by the lending company that ordered the appraisal.
Under the Equal Credit Opportunity Act, any consumer requesting a copy of the report must be provided with it by their lender.
Myth: There's no need for home buyers to even concern themselves with what the appraisal contains so long as their lending agency is fine with the contents therein.
Reality: A consumer should definitely look through their document; there will probably be some questions or some worries about the accuracy of the appraisal report that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make.
Also, the report makes a valuable record for future reference, containing 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 vicinity.
Myth: There is no reason to order an appraisal unless you are trying to get an estimate of the value of a property during a sales transaction involving a lending agency.
Reality: Depending upon their qualifications and designations, appraisers can and may perform a variety of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: There's no reason to get an appraisal if you have had a home inspection.
Reality: A home inspection report serves a completely different purpose than an appraisal report.
The appraiser concludes on an opinion of value in the appraisal process and resulting appraisal report.
A home inspector assesses the condition of the building and its major components and reports these findings.