Myth: Market value should be similar to the assessed value of the property.
Reality: This usually isn't true; most states do support the idea that the assessed value is the same as market value, but not always. Examples include when interior reconstruction has happened and the assessor has not seen the improvements, or when homes in the area have not been reassessed for an prolonged time.
Myth: Depending on whether the appraisal is produced for the buyer or the seller, the value of the property will vary.
Reality: The appraiser has no vested interest in the outcome of the appraisal report and should render his task with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: The replacement cost of the property will be on par with the market value.
Reality: The way market value is found is based on what a buyer would likely pay a willing seller for a property without being under duress from any external group to buy or sell. The dollar amount needed to reconstruct a property is what constitutes the replacement cost.
Myth: Certain formulae, such as the price per square foot of the property, are the methods appraisers use to come to the value of a home.
Reality: Appraisers complete a full analysis of all factors in consideration to the value of a house, including its location, condition, size, proximity to facilities and recent values of comparable homes.
Myth: As properties appreciate by a specific percentage - in a strong economy - the homes in proximity are figured to increase by the same amount.
Reality: Any value an appraiser derives in regards to a certain property is always personalized, based on certain factors derived from the data of comparable houses and other considerations within the house itself. It doesn't matter if the economy is on the rise or declining.
Myth: The house's outside is determinate of the actual value of the home; it is unnecessary to do an interior appraisal.
Reality: There are a multitude of different factors that conclude the value of a home; these factors include area, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from just inspecting the property from the exterior.
Myth: Since you're the one funding for the appraisal report when applying for your loan to purchase or refinance real estate, you own the provided appraisal.
Reality: The document is, in fact, legally owned by the lending agency - unless the lender "relinquishes its interest" in the document. Home buyers must be given a version of the report upon written request as per the Equal Credit Opportunity Act.
Myth: It doesn't matter to consumers what's in the appraisal report so long as it satisfies the needs of their lending company.
Reality: It is almost imperative for consumers to peruse a copy of their appraisal report so that they can verify the accuracy of the document, in case it's required to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can double as a record for the future, containing an exorbitant amount of information - including, but certainly 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: There is no reason to hire an appraiser unless you are trying to get an estimate of the value of a property during a sales transaction involving a lending agency.
Reality: Ordering an appraisal can fulfill a variety of needs depending on the designations and certifications of the appraiser involved; appraisers can perform a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: A property inspection serves the same purpose as an appraisal.
Reality: A home inspection serves a completely different purpose than an appraisal report. The function of an appraisal is to form an opinion of market value during the appraisal process and the completion of the report. House inspectors will produce a report that will show the condition of the property and its major components and possible damage.