Common myths about appraising
By law, an appraiser is required to be state-licensed to offer appraisals for federally-related sales. Also by law, you are allowed to request a copy of the completed report from your lender. Contact our professional staff if you have any concerns about the appraisal process.
Myth: Assessed value generally will be similar to to market value.
Fact: It could be that North Carolina, like most states, validates the common myth that the assessed value is the same as the market value; however, this is sometimes the exception rather than the rule. Examples include when interior remodeling has occurred and the assessor does not know about the improvements, or when houses in the vicinity have not been reassessed for an prolonged period of time.
Myth: Depending on if the appraisal is ordered for the buyer or the seller, the cost of the property will vary.
Fact: 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: Market value should equal replacement cost.
Fact: Market value is derived from what a willing buyer would likely pay a willing seller for a specific house, with neither being under duress to buy or sell. Replacement cost is the dollar amount required to reconstruct a home in-kind.
Myth: Appraisers use a formula, like a certain price per square foot, to come to the worth of a property.
Fact: Appraisers make an exhaustive analysis of all factors in consideration to the price of a home, including its location, condition, size, proximity to facilities and recent sale prices of comparable houses.
Myth: As houses appreciate by a certain percentage - in a strong economy - the homes nearby are expected to increase by the same amount.
Fact: Cost increase of a specific house is always concluded on an individualized basis, factoring in information on comparable homes and other relevant specifications within the property itself. It makes no difference if the economy is powerful or bad.
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Myth: The home's exterior is determinate of the actual worth of the home; it is unnecessary to do an interior inspection.
Fact: There are a multitude of different variables that show property value; these factors include location, condition, improvements, amenities, and market trends. Obviously, none of these factors can be derived simply by looking at the home from the outside.
Myth: Because consumers fund appraisal reports when applying for loans to buy or refinance their house, they own their appraisal report.
Fact: The report is, in fact, legally owned by the lender - unless the lender "releases its interest" in the appraisal. Consumers have to be provided with a version of the document upon written request as per the Equal Credit Opportunity Act.
Myth: Consumers need not care about what is in their appraisal so long as it satisfies the requirements of their lending group.
Fact: It is a very good idea for home buyers to peruse a copy of their report so that they can double-check the accuracy of the document, in case there is a need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can double as a record for the future, since it contains an incredible 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 area.
Myth: Appraisers are hired only to estimate building values in property sales involving mortgage-lending transactions.
Fact: Ordering an appraisal can fulfill a variety of necessities depending on the designations and certifications of the appraiser involved; appraisers can perform a variety 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.
Fact: A home inspection report serves a completely different purpose than an appraisal report. The reason behind an appraisal report is to conclude upon an opinion of fair market value during the appraisal process and the completion of the report. A home inspector determines the condition of the home and its major components and reports their findings.