Appraisal myths debunked
Legally, a real estate appraiser needs to be state certified to write legitimate appraisal reports for federally-supported sales. You have the ability to request a copy of the finished report from your lending agency. Contact our professional staff if you have any concerns about the appraisal process.
Myth: Market value has to be equivocal to the assessed value of the property.
Fact: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always. Examples include when interior remodeling has happened and the assessor does not know about the improvements, or when houses in the vicinity have not been reassessed for an prolonged period.
Myth: The buyer or the seller sometimes may have impact in the cost of the home depending upon for whom the appraiser is working.
Fact: There is no real interest on the part of the appraiser in the result of the report, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is written.
Myth: Market value should be the same as replacement cost.
Fact: The way market value is found is based on what a home buyer would likely pay a willing seller for a home without being under pressure from any outside group to purchase or sell. The replacement cost is the dollar amount necessary to rebuild a home in-kind.
Myth: Specific formulae, such as the price per square foot of the property, are the methods appraisers use to ascertain the value of a property.
Fact: There are many different calculations that an appraiser will use to make a full investigation of every factor in consideration of the home, such as the size, location, condition, how close it is to specific facilities and the cost of recently sold comparable homes.
Myth: As homes increase their worth by a specific percentage - in a strong economic state - the houses within the same neighborhood are expected to increase by the same amount.
Fact: Cost appreciation of a certain property is always concluded on an individualized basis, factoring in data on comparable properties and other relevant specifications within the property itself. It doesn't matter if the economy is on the rise or declining.
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Myth: The house's outside is determinate of the actual price of the home; there is no need to do an interior inspection.
Fact: To determine an accurate value beyond all doubt, an appraiser must inspect the home on a variety of factors based on area, condition, improvements, amenities, and current market trends. As you can see, none of these variables can be found simply by inspecting the home from the outside.
Myth: Since the consumer is the person 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: Legally, the appraisal is owned by the lending agency unless the lender releases their interest in the report. By the Equal Credit Opportunity Act, any home buyer demanding a copy of the appraisal report must be provided with one by their lending company.
Myth: There's no reason for consumers to even concern themselves with what the appraisal report contains so long as their lending institution is satisfied.
Fact: A consumer should definitely inspect their appraisal report; there could be some questions or some worries about the accuracy of the inspection that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of information contained in an appraisal that can be useful to the consumer in the future, such as 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: Appraisers are hired only to estimate building values in home sales involving mortgage-lending deals.
Fact: Appraisers can have many different qualifications and designations which allow them to perform a lot of different services including - but not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: You shouldn't need to get an appraisal if you have had a home inspection.
Fact: Appraisal reports are nothing like a home inspection. The purpose of an appraisal report is to conclude upon an opinion of fair market value during the appraisal process and the completion of the appraisal report. House inspectors will produce a report that will determine the condition of the house and its major components and possible damage.