Common myths about appraising
Legally, an appraiser needs to be state certified to create substantiated appraisal reports for federally-related transactions. You are also entitled by law to receive a copy of the completed appraisal from your lender. Contact Herrin Appraisal Company if you have any questions about the appraisal procedure.
Myth: Assessed value generally will be similar to to market value.
Fact: This is not often the case; most states do support the suggestion that the assessed value is the same as market value, but not always. Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby properties are perfect examples of why the price can vary.
Myth: Depending on whether the appraisal is drawn up for the buyer or the seller, the value of the house will vary.
Fact: The price of the property does not affect the pay of the appraiser; as such, the appraiser has no vested interest in the cost of the home. Obviously, he will complete his task with impartiality and independence regardless for whom the appraisal is provided.
Myth: Any time market value is found, it should be similar to the replacement cost of the house.
Fact: Market value is based on what a willing buyer would likely pay a willing seller for a certain property, with neither being under pressure to buy or sell. The dollar amount required to rebuild a house is what shows the replacement cost.
Myth: Specific methods, like the price per square foot of the property, are the ways appraisers use to determine the cost of a home.
Fact: 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 costs of comparable homes.
Myth: In a strong economy - when the costs of homes in a given neighborhood are reported to be appreciating by a particular percentage - the prices of individual houses in the proximity can be expected to increase by that same percentage.
Fact: Any price at which an appraiser arrives concerning a specific house is always personalized, based on certain factors derived from the data of comparable properties and other considerations within the property itself. It doesn't matter if the economy is doing well or declining.
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Myth: The home's outside is determinate of the actual value of the property; there is no need to do an interior inspection.
Fact: There are a number of different factors that conclude the value of a house; these factors include area, condition, improvements, amenities, and market trends. There's no real way to get all of this information from just inspecting the home from the outside.
Myth: Because consumers pay for appraisals when applying for loans to buy or refinance real estate, they own their appraisal report.
Fact: Legally, the document is owned by the lending company unless the lender relinquishes their interest in the document. However, home buyers have to be given a copy of the document upon written request, because of the Equal Credit Opportunity Act.
Myth: There's no point for consumers to even concern themselves with what the appraisal contains so long as their lender is fine with the contents therein.
Fact: A home buyer should definitely inspect their appraisal report; there will probably be some questions or some worries about the accuracy of the report that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes a valuable record for future reference, comprised of helpful and often-revealing data - including, but 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: The only reason someone would hire an appraiser is if a property needs its value estimated in a lender-based sales transaction.
Fact: Ordering an appraisal can fulfill a variety of requirements 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: You don't have to get an appraisal if you order a home inspection.
Fact: An appraisal does not fulfill the same purpose as an inspection. The reason behind an appraisal is to arrive at an opinion of fair market value during the appraisal process and the production of the appraisal. House inspectors will create a report that will express the condition of the property and its major components and possible damage.
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