Common myths about appraising
It is required by the government that an appraiser is required to be state-licensed to write appraisal reports for federally-supported property purchases in California. Also by law, you are allowed to receive a copy of the completed report from your lender. Contact us if you have any concerns about the appraisal procedure.
Myth: The value that is ascertained by the appraiser will be equivalent to the market value.
Fact: This usually isn't true; most states do support the idea that the assessed value is the same as market value, but not always. Sometimes when interior remodeling has been done and the assessor is has not investigated the improvement or properties in the area have not been reassessed for quite some time, it may vary wildly.
Myth: The buyer or the seller will have impact in the cost of the house depending upon for whom the appraiser is working.
Fact: The appraiser has no vested interest in the outcome of the appraisal and should conduct his job with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Any time market value is found, it should be the same as the replacement cost of the house.
Fact: Market value is arrived at through what a willing buyer would be interested in paying a willing seller for a particular home, with neither being under undue influence to buy or sell. The dollar amount required to reconstruct a house is what shows the replacement cost.
Myth: Appraisers use a formula, such as a specific price per square foot, to come to the cost of a home.
Fact: There are many numerous ways that an appraiser will use to make a comprehensive analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to certain facilities and the value of recently sold comparable houses.
Myth: In a robust economy - when the sales prices of properties in a given area are found to be rising by a certain percentage - the costs of individual houses in the area can be expected to increase by that same percentage.
Fact: Any price at which an appraiser concludes concerning a particular home is always personalized, based on certain factors derived from the data of comparable houses and other specifications within the home itself. It makes no difference whether the economy is good or poor.
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Myth: The home's outside is determinate of the actual price of the property; it is unnecessary to do an interior appraisal.
Fact: Home value is concluded by a multitude of factors, including location, condition, improvements, amenities, and market trends. There's no real way to get all of this information from simply viewing the property from the outside.
Myth: Since the consumer is the one who provides the money to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal report is theirs.
Fact: The document is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the document. Under the Equal Credit Opportunity Act, any consumer demanding a copy of the document must be provided with it by their lending agency.
Myth: It doesn't matter to consumers what's in the report so long as it meets the needs of their lending company.
Fact: It is a very good idea for home buyers to go through a copy of their report so that they can verify 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. Also, the report makes a near perfect record for future reference, filled with helpful and often-revealing 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 vicinity.
Myth: The only reason someone would hire an appraiser is if a home needs its worth assessed in a lender-based sales transaction.
Fact: Ordering an appraisal can fulfill a variety of necessities depending on the designations and certifications of the appraiser involved; appraisers can provide a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: An appraisal is no different than a home inspection report.
Fact: Appraisal reports are completely different than a home inspection. The point of an appraisal is to form an opinion of fair market value during the appraisal process and the production of the appraisal report. A home inspector determines the condition of the property and its major components and reports these findings.
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