Myth: Assessed value should always equate market value.
Reality: While most states back the suggestion that assessed value is equal to estimated market value, this generally is not the case.
Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby houses are excellent examples of why there might be a differential in price.
Myth: The opinion of value of a property will differ depending upon whether the appraisal is conducted for the buyer or the seller.
Reality: There is no vested interest on the part of the appraiser in the outcome of the report, therefore he will complete his work with impartiality and independence, regardless of for whom the appraisal is ordered.
Myth: Market value will mirror replacement cost.
Reality: Market value is found by what a willing buyer would likely pay a willing seller for a particular house, with neither being under pressure to buy or sell.
The dollar amount required to reconstruct a home is what shows the replacement cost.
Myth: There are certain ways that real estate appraisers use to find the cost of a home, such as the price per square foot.
Reality: Appraisers make an exhaustive analysis of all factors in consideration to the value of a home, including its location, condition, size, proximity to facilities and recent sale prices of comparable homes.
Myth: In a robust economy - when the values of properties in a given neighborhood are found to be appreciating by a certain percentage - the values of individual houses in the area can be expected to increase by that same percentage.
Reality: Any value an appraiser derives concerning a certain property is always personalized, based on certain factors derived from the information of comparable homes and other specifications within the home itself.
It makes no difference whether the economy is strong or terrible.
Myth: You can usually tell what a house is worth simply by looking at the outside.
Reality: There are a number of different variables that conclude property value; these factors include area, condition, improvements, amenities, and market trends.
An exterior inspection definitely can't provide all of the information needed.
Myth: Since you're the one coughing up the cash for the appraisal report when applying for your loan to buy or refinance your house, you own the produced appraisal report.
Reality: The document is, in fact, legally owned by the lending agency - unless the lender "relinquishes its interest" in the appraisal report.
Due the Equal Credit Opportunity Act, any home buyer asking for a copy of the appraisal report must be provided with it by their lending company.
Myth: It doesn't matter to consumers what's in the appraisal so long as it satisfies the requirements of their lending agency.
Reality: It is almost imperative for home buyers to read a copy of their appraisal so that they can verify the accuracy of the document, in case they need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make.
An appraisal report can serve as a record for the future, containing a great deal 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 vicinity.
Myth: There is no reason to hire an appraiser unless you are trying to get an assessment of the value of a property during a sales transaction involving a lending institution.
Reality: Appraisers can have many different qualifications and designations which allow them to provide a lot of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: A property inspection serves the same purpose as an appraisal.
Reality: A home inspection serves a completely different purpose than an appraisal.
The task of the appraiser is to form an opinion of value in the appraisal process and through producing the report.
A home inspector analyzes the condition of the building and its main components and reports these findings.
