Appraisal myths debunked

It is mandated by legal agencies that an appraiser is required to be state-licensed to perform appraisal reports for federally-supported property purchases in North Carolina. Also by law, you are allowed to demand a copy of the completed appraisal from your lending agency. Contact our professional staff 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: While most states support the concept that assessed value is the same as estimated market value, this commonly is not the case. Examples include when interior reconstruction has occurred and the assessor has not seen the improvements, or when homes in the vicinity have not been reassessed for an extended time.

Myth: The value of a property will differ depending upon if the appraisal is ordered for the buyer or the seller.

Fact: The appraiser has no vested interest in the result of the appraisal report and should conduct services with independence, objectivity and impartiality - no matter for whom the appraisal is written.

Myth: Any time market value is established, it should be the same as the replacement cost of the home.

Fact: The way market value is arrived at is based on what a home buyer would be willing to pay a willing seller for a house without being under duress from any outside group to buy or sell. Replacement value is the dollar amount required to reconstruct a property in-kind.

Myth: There are specific ways that real estate appraisers use to find the cost of a house, such as the price per square foot.

Fact: There are many varied formulae that an appraiser will use to make a detailed analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to specific facilities and the worth of recently sold comparable homes.

Myth: In a robust economy - when the values of homes in a given county are found to be increasing by a particular percentage - the prices of individual homes in the vicinity can be expected to appreciate by that same percentage.

Fact: All increase of value is on an individual basis, found by information on relevant elements and the data of comparable homes. It doesn't matter if the economy is on the rise or declining.

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Myth: Just looking at what the house looks like on its exterior gives an idea of its value.

Fact: There are a multitude of different variables that determine property value; these factors include area, condition, improvements, amenities, and market trends. As you can see, none of these factors can be found simply by examining the property from the exterior.

Myth: Considering that the consumer is the party who provides the money to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.

Fact: Unless a lender releases its interest in the document, it is legally owned by the lending agency that purchased the appraisal. However, home buyers have to be given a copy of the appraisal report upon written request, because of the Equal Credit Opportunity Act.

Myth: Home buyers need not care about what is in their appraisal so long as it meets the necessities of their lending group.

Fact: Only if consumers check out a copy of their appraisal can they ensure its accuracy and possibly need to question the result. 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, comprised of 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 area.

Myth: There is no reason to order an appraisal unless you are trying to get an assessment of the price of a house during a sales transaction involving a lending company.

Fact: Based upon their qualifications and designations, appraisers can and may provide a series of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.

Myth: An appraisal report is the same as a home inspection.

Fact: A home inspection report serves a completely different purpose than an appraisal. An appraiser forms an opinion of value in the appraisal process and resulting report. A home inspector assesses the condition of the building and its main components and reports these findings.